Nvidia’s 843 % income increase shows being ahead in AI counts

He’s not as famous as Steve Jobs or Bill Gates yet, but NVIDIA’s electrical engineer CEO, Jensen Huang, is as iconic as any Silicon Valley pioneer.

As with many Valley success stories, his origins were humble. This year marks 50 years since Huang migrated from Taiwan to the US as a child. He lived in a boy’s dormitory at an elementary school in Kentucky.

But with an engineering background he went on to be a director at LSI Logic Corporation which designed and sold semiconductors targeting data centres and mobile networks. He also worked designing microprocessors at AMD, says his profile.

Year 2023 marks thirty years since Huang co-founded NVIDIA. He remains the company’s president and CEO.

“Our invention of the GPU in 1999 sparked the growth of the PC gaming market, redefined modern computer graphics, and revolutionized parallel computing,” he says on LinkedIn. “GPU computing went on to ignite modern AI — the next era of computing — with the GPU acting as the brain of computers, robots, and self-driving cars that can perceive and understand the world.”

His cutting edge knowledge of GPUs, networks, server and data centre technology has extended to NVIDIA working at the forefronts of developing equipment and systems for AI. Gaming has been an NVIDIA revenue spinner.

Thirty years on, and Huang presides over a recently declared trillion dollar company that has made US$13.5bn in revenue since May, according to its Q2/2024 earnings. “NVIDIA today reported revenue for the second quarter ended July 30, 2023, of $13.51 billion, up 101% from a year ago and up 88% from the previous quarter.” Net income is up 843 percent.

A 101 percent year-on-year revenue increase is also great news for shareholders. “During the second quarter of fiscal 2024, NVIDIA returned $3.38 billion to shareholders in the form of 7.5 million shares repurchased for $3.28 billion, and cash dividends. As of the end of the second quarter, the company had $3.95 billion remaining under its share repurchase authorization. Diluted earnings per share is up 854 percent year-on-year.

The windfall has triggered a massive buyback of NVIDIA shares. ” On August 21, 2023, the Board of Directors approved an additional $25.00 billion in share repurchases, without expiration. NVIDIA plans to continue share repurchases this fiscal year.”

NVIDIA is still doing well in gaming, raking in US$2.49bn in gaming revenue, up 22 percent from a year ago, not only from its GeForce RTX gaming graphics processing units (GPU’s), but also from its cloud gaming, where already it is employing AI to offer natural language interactions with virtual characters.

The company made a more modest US$253m from its workstation revenue and took in 15 percent less revenue in its automotive offerings, but who cares, when your main division revenue is up 101 percent?

If you are blown away by these figures, consider that in the next quarter, NVIDIA is forecasting revenue of US$16bn – US$2.5bn more than in the second quarter.

The secret source is NVIDIA’s ability to produce and quickly manufacture processors that bring generative AI capabilities to enterprise, including server capabilities in the cloud. In May it announced that its GH200 Grace Hopper Superchip was in full production and was “set to power systems coming online worldwide to run complex AI and HPC workloads”. (Grace Hopper was a US rear admiral associated with the development of portable programming languages and the COBOL business programming language, still in use today.)

“With Grace Hopper Superchips in full production, manufacturers worldwide will soon provide the accelerated infrastructure enterprises need to build and deploy generative AI applications that leverage their unique proprietary data.” The Superchip was one of several items in NVIDIA’s AI technologies announced in the quarter.

The other part of NVIDIA’s secret sauce is long term partnerships carved over decades, including with Amazon and Microsoft. At Dell Technology World in May, Huang described generative AI as the “iPhone moment for AI” and “a much, much bigger deal” than the PC revolution. NVIDIA’s close relationship with Dell is seeing NVIDIA AI solutions being rolled out to Dell customers. Huang has been a close friend of Dell COO Jeff Clarke for decades and the two spoke together at the conference.

NVIDIA announced its generative AI tools in March 2023.

Published by Channel News Australia.

Posted in Features.

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