NVIDIA Reveals China Data Center Revenue Drops to Single-Digit Percentage
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GPU chip giant NVIDIA's latest quarterly earnings report once again exceeded market expectations.
After the U.S. market closed on February 21, NVIDIA reported stronger-than-expected revenue and profits for its fourth fiscal quarter and fiscal year 2024. Its fourth-quarter revenue reached a record $22.1 billion, up 22% from the previous quarter and 265% year-over-year, surpassing Wall Street analysts' expectations of $20.45 billion.
For the full fiscal year 2024, NVIDIA's total revenue reached $60.9 billion, a 126% increase year-over-year, with adjusted earnings per share at $12.96, up 288% year-over-year.
Most of the company's explosive growth can be attributed to its data center segment. Fourth-quarter data center revenue was $18.4 billion, more than five times the same period last year, exceeding analysts' expectations of $17.2 billion and accounting for 83% of NVIDIA's total revenue.
NVIDIA CEO Jensen Huang stated that accelerated computing and generative AI have reached a "tipping point," with surging demand from companies, industries, and countries worldwide. The California-based company holds the computing power "lifeline" for businesses across various sectors in multiple regions. The AI-driven industrial revolution has prompted numerous enterprises to compete for NVIDIA GPUs. According to Jensen Huang, apart from large cloud providers, GPU suppliers, enterprise software, and consumer internet companies, vertical industries such as automotive, financial services, and healthcare now represent billions of dollars in demand.
However, while other regions continue to achieve record-breaking performance, NVIDIA's data center revenue from China has significantly declined due to new US export controls, accounting for only single-digit percentages in the fourth fiscal quarter. The company expects the same trend for the next fiscal quarter in China. Previously, data center business from restricted regions like China contributed about 20% to 25% of NVIDIA's total revenue.
NVIDIA emphasized that it has not yet obtained licenses from the US government to ship restricted products to China but has begun shipping alternative products that do not require licenses. Earlier this month, reports indicated that NVIDIA's China-specific AI chip, the H20, is now available for pre-order through distributors.
Beyond the data center business, NVIDIA's gaming revenue in the fourth fiscal quarter reached $2.9 billion, a 56% year-over-year increase. Automotive revenue declined by 4% to $281 million, while professional visualization revenue grew 105% to $463 million.
Currently, NVIDIA's biggest challenge for further growth is supply constraints. Jensen Huang stated that while overall supply conditions are improving, shortages persist and are expected to continue throughout the year. He also mentioned that the company will soon launch new products, which may once again be in short supply. NVIDIA's CFO Colette Kress stated that the market demand for the company's next-generation products far exceeds supply levels, as "the need to build and deploy AI solutions has reached almost every industry."
NVIDIA is set to host the GTC 2024 conference in the U.S. from March 18 to 21, where it will unveil its latest achievements in accelerated computing, generative AI, and robotics. The market widely expects the company to introduce its next-generation B100 architecture GPU products.
Since the beginning of this year, NVIDIA's market value has surged by over 40%, reaching $1.67 trillion, making it one of the world's highest-valued publicly traded companies. Last week, its market cap briefly surpassed Amazon and Google, and yesterday it overtook Tesla to become Wall Street's most traded stock.
The significant rise in NVIDIA's stock price reflects the market's continuously increasing expectations for its performance. The company forecasts next-quarter revenue of $24 billion, plus or minus 2%, higher than analysts' expectations of $21.8 billion.
Boosted by the earnings release, NVIDIA's stock surged over 10% in after-hours trading. Concurrently, U.S. chip stocks rose across the board: ARM up 8%, AMD up 3.6%, TSMC up 2.6%, ASML up 2.5%, and Intel up 1%.