Nvidia’s Rocket-Ship Year

Nvidia CEO Jensen Huang should be taking notes about his daily life. This is sure to be a year he’ll want to remember in detail. Nvidia’s dominance of chips that are vital for generative AI is translating into growth that is extraordinary for a 30-year-old company. Not only did it report better-than-projected second-quarter revenue growth of 101% on Wednesday, Nvidia projected third-quarter revenue that would be up 170% on a year earlier. By the time the fiscal year ends next January, Nvidia should have brought in north of $50 billion in revenue, nearly double that of last fiscal year and nearly 5 times its annual revenue in fiscal 2020. 

The surge is flowing through to Nvidia’s bottom line. Its net profit margin hit 46% in the quarter, compared with 10% in the year-earlier quarter. Just as a comparison, Intel hasn’t reported a net margin higher than 31% in the past 32 years, according to S&P Global Market Intelligence. (For more on Nvidia’s quarter, see here.) As my colleagues Jessica Lessin and Stephanie Palazzolo have written in the past couple of days, the luck might not last. Developments in AI technology may give rival chips more of a chance, for instance. And most of the big tech firms, including Amazon, Google and Microsoft—all currently Nvidia customers—are developing their own AI chips to replace Nvidia’s product, as we laid out in this story in May.