Nvidia Q2 Earnings: Forecasts Missed the Mark, Blackwell will contribute several $bln revenue in Q4
AInvestThursday, Aug 29, 2024 8:56 am ET
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Nvidia Q2 earnings beat estimates for both revenue and income. However, Q3 revenue forecasts missed the highest mark.

Here are Nvidia Conference Call Takeaways:

Data Center:

Cloud service providers account for 45% of Nvidia's data center revenue, with over half coming from consumers and IT enterprises. Customers are rapidly purchasing Hopper chips, with shipments expected to increase in the second half of fiscal 2025. This quarter, Nvidia H200 accelerated shipments.

The latest MLPerf benchmarks highlight significant technical advantages, leading in all tasks. Over the past four quarters, inference business has accounted for over 40% of data center revenue. Nearly every enterprise needs backend data processing, and Nvidia's GPUs are the only accelerators globally capable of handling and accelerating data, whether SQL, Pandas, or new Polar data. Who else can match us?

In the AI era, first-mover advantage is crucial. The first company to gain the high ground can launch more transformative products, while the second often falls behind. The market urgently needs upgraded AI infrastructure, with Hopper being the most advanced.

Blackwell is in severe supply shortage, a situation expected to continue into next year. We have improved Blackwell to increase yield and production, with optical mask adjustments completed while maintaining functionality. Mass production is expected to begin in Q4, contributing billions in revenue.

Investing in Nvidia’s infrastructure quickly yields returns, and it offers the highest ROI among all infrastructure investments. First, Hopper and Blackwell’s performance is powerful, providing efficient data processing and recommendation systems, significantly boosting productivity. Second, enterprises can leverage our equipment for their business, such as creating AI customer service. Lastly, even if the equipment isn’t used immediately, it can be rented out, with high demand for generative AI creating ample rental opportunities.

Jensen Huang directly stated: “Next year is going to be a great year; data center business will grow significantly, and Blackwell will change the industry game.”

In sovereign AI, the National Institute of Advanced Industrial Science and Technology in Japan is collaborating with us to build its AI supercomputer. Sovereign AI revenue is expected to exceed $10 billion this year. Many countries now recognize sovereign data as a gold mine needing AI utilization.

Nvidia's data center revenue in China grew sequentially this fiscal quarter, but remains below levels before US export controls. GPU competition in China is expected to be intense.

Game, Professional Visualization, Automotive:

AI PCs and gaming laptops are seeing healthy growth. More games supporting Nvidia RTX and DLSS technology are being released, including titles like "Indiana Jones and the Dial of Destiny," "Dune: Awakening," and "Dragon Age: Dreadwolf." Nvidia's cloud gaming library, GeForce Now, now boasts over 2,000 games, the highest number among cloud gaming libraries.

In professional visualization: The automotive industry is a key vertical driving growth, with a trend towards digital workflows. Major multinational companies like Foxconn and Mercedes-Benz have signed multi-year contracts with Omniverse Cloud.

In automotive, robotics, and healthcare: Almost every autonomous vehicle company’s data center uses Nvidia products. Siemens and BYD Electronics are applying Nvidia's Isaac Robotics platform in robotics assembly and component manufacturing.

AI is making significant strides in medical imaging, surgical robotics, electronic patient records, and drug discovery, becoming a multi-billion-dollar industry.

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