NVIDIA records mega profit thanks to its AI chip business

It crushed expectations with $13.51 billion in second quarter revenue.

Ann Wang / reuters

If you've been wondering who's making the most money from the AI boom, NVIDIA may have the answer in it's latest earnings report. The company announced revenue of $13.51 billion in the second quarter, more than doubling the $6.7 billion it made last year and crushing market expectations. On top of that, it earned $6.18 billion in GAAP net income, nine times the $656 million it made in Q2 2022.

NVIDIA's gaming segment did pretty well too, thanks to $2.49 billion in Q2 revenue, up 22 percent from last year. During the quarter, it started shipping the budget-oriented GeForce RTX 4060 GPU, announced the Avatar Cloud Engine (ACE) for games and saw the addition of 35 DLSS games including Diablo IV. (Earlier this week, it unveiled DLSS 3.5 designed to use AI to make ray-traced games look better.)

But it was very much the AI and data center segments that pushed NVIDIA to new heights. It saw a record $10.32 billion in revenue in that sector alone, up 141 percent from Q1 2023 and 171 percent from a year ago.

Earlier this year, CEO Jensen Huang said that back in 2018, NVIDIA had a "bet the company" moment when it started using AI to power DLSS, "and while we were reinventing CG with AI, we were reinventing the GPU for AI." He later added that "the future is a large language model (LLM) at the front of just about everything," from VFX to heavy industry.

NVIDIA's prescience is now paying off with the company's flagship H100 Tensor Core GPU. It's also been building more complex systems like the HGX box, which puts eight H100 GPUs into a single computer. All of that helped it create immense cashflows with top customers spending heavily on NVIDIA GPU tech to build complex AI models — like Microsoft with its Azure segment.

In addition, the company's use of custom software and apps makes it difficult for customers to switch rivals like AMD. "Our Data Center products include a significant amount of software and complexity which is also helping for gross margins," said NVIDIA finance chief Colette Kress in an analyst call.

All that led to a perfect storm of profit. "During the quarter, major cloud service providers announced massive NVIDIA H100 AI infrastructures. Leading enterprise IT system and software providers announced partnerships to bring NVIDIA AI to every industry. The race is on to adopt generative AI," Huang said in a statement. "Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI." The company expects more to come, forecasting around $16 billion in revenue for Q3.