Nvidia Growth Surges Further on Data Center Business

Nvidia's already impressive performance was boosted by a remarkable 427% growth in its data centerbusiness in the latest quarter. This surge comes as companies continue to invest heavily in Nvidia's artificial intelligence processors.

The critical customers for Nvidia's graphics processing units (GPUs) are major cloud providers like Amazon Web Services, Microsoft Azure, Google Cloud, and Oracle Cloud, which accounted for approximately 45% of Nvidia's $22.56 billion data center sales in the April quarter. 

Nvidia’s better-than-expected earnings report showed that cloud providers are experiencing immediate and robust returns on their investments. Analysts contend that every dollar spent on Nvidia hardware can be rented out for $5 over four years. 

Newer Nvidia products, such as the HDX H200 offer even stronger returns. For every dollar spent on these servers, a cloud provider can generate $7 in revenue over four years.

Nvidia CEO Jensen Huang has attributed the high demand to companies like OpenAI, Google, Anthropic, and approximately 20,000 generative AI startups, all eager to utilize every available GPU.

Nvidia has announced an aggressive timeline for its next-generation GPU, Blackwell, set to be available in data centers by the fiscal fourth quarter. Initial customers for these new chips include Amazon, Google, Meta, Microsoft, OpenAI, Oracle, Tesla, and Elon Musk’s xAI. Following these announcements, Nvidia shares surged 6% in extended trading, exceeding $1,000 for the first time, and the company declared a 10-for-1 stock split after a 25-fold increase in share price over the past five years.