Nvidia’s earnings on Wednesday capped off another big earnings season for the tech sector. The chip giant reported another blockbuster quarter, with revenue surging 85% to $82 billion. It also unveiled an $80 billion share buyback program and raised its dividend.
Investors, as is becoming customary immediately after Nvidia’s booming earnings, weren’t impressed, with shares sliding after earnings for the fourth time in a row.
I sat down with CNBC’s Arjun Kharpal to get his take on the highlights.
Kai: What do the earnings say about Nvidia’s relationship with China?
Arjun: Nvidia CEO Jensen Huang sounded pretty defeated on China in an interview with CNBC. He said that Nvidia has “largely conceded” China’s AI chip market to Huawei, which is one of the country’s biggest tech firms.
Nvidia is caught in the geopolitical battle between the U.S. and China and export controls. It’s been given the green light from the U.S. to sell certain chips to China, but Beijing recently urged local companies to buy domestic alternatives. That is where Huawei comes in. Huawei and other tech firms in China have created rival chips to Nvidia’s GPUs which are designed for AI.
While, pound for pound, they don’t compete with Nvidia’s top-end products, the Chinese chips are filling the void left by the world’s most valuable company.
Kai: Nvidia made a big change to the way it reported earnings. Why is that significant?
Arjun: Nvidia is now reporting earnings in two categories: data center and edge computing. The data center business is where it houses revenue from hyperscalers or sovereign AI projects. Edge computing is revenue from things like PC or robotics and automotive.
While Nvidia is known for its GPUs that go into a data center, the company is trying to tell investors it is more than that and is the computing platform of the future whether that is in an AI factory, a robot or a car.
Kai: Nvidia’s known for its GPUs. Why was the company talking about a $200 billion opportunity in the CPU market?
Arjun: Nvidia’s graphics processing units (GPUs) have underpinned the training of some of the most advanced models in the world. But as the world moves from training to “inferencing,” the actual process of running these models, the central processing unit, or CPU, is in focus.
Some critics have said that while Nvidia dominated GPUs, it will have much more competition in the CPU space. Nvidia tried to tell investors that it would still be a dominant player in the world of CPUs.
Nvidia’s CFO said the company’s new Vera CPU opens up a $200 billion market. And Nvidia is anticipating $20 billion in total CPU revenue this year.
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Stock of the week
Nvidia stock
Nvidia stock dropped just under 2% on Thursday, despite the company reporting another quarter of blowout earnings. Some people are never happy.
