Nvidia makes record sales with GeForce and doesn't even mention it
Despite the ban on exports to China, Nvidia posts a new record quarter. The GeForce division is growing strongly, but remains tiny compared to AI GPUs.
(Image: c't)
For the first time in the company's history, Nvidia's quarterly revenue exceeds 40 billion US dollars: Nvidia generated $44.1 billion in revenue in the first fiscal quarter from February to the end of April – 12 percent more than in the previous three months and 69 percent more than in the same period last year. This was announced by the company on Wednesday evening after the US stock exchange closed.
The gaming division, which focuses on GeForce graphics cards, is actually doing very well. With a turnover of almost $3.8 billion, it is making more money than ever before. Only taking inflation into account would gaming revenue have been slightly higher in spring 2022 (a good $3.6 billion at the time, adjusted for inflation just under $4 billion).
This development shows how well the new GeForce graphics cards in the RTX 5000 series must be selling. However, Nvidia doesn't care much about this: at the bottom of its annual report, the company only mentions the launch of the GeForce RTX 5070 and 5060 as one of many quarterly highlights. CFO Colette Kress does not mention gaming at all in her accompanying commentary. Compared to the AI accelerator business, the GeForce division remains tiny.
(Image:Â Nvidia)
Revenue from AI accelerators grows even after China ban
Nvidia generated $34.2 billion in revenue worldwide in the first quarter with GPU accelerators. $4.6 billion of this came from H20 accelerators for China before the US government banned their sale. According to its annual report, Nvidia could have sold another $2.5 billion worth of H20 GPUs to China without the export ban. The Chinese AI market would have continued to grow in the future: Nvidia says it is losing $8 billion in the current quarter.
However, the rest of the world is making up for the losses. Nvidia expects further growth, but at a much lower rate during the transition phase. Company-wide sales of $45 billion are planned for the current quarter.
Paper profit falls due to depreciation
Nominally, gross margin, operating profit and net profit are down compared to the previous quarter because Nvidia is writing off H20 accelerators worth $4.5 billion. At Nvidia, sequential quarterly comparisons are more exciting than year-on-year comparisons because the vast majority of sales come from AI data centers, which, unlike gaming graphics cards, are not subject to strong seasonal fluctuations.
The gross margin, for example, falls from 73% to 60.5%, but is expected to exceed 71% again in the next quarter, as depreciation and amortization is now complete. Operating profit drops from a good $24 billion to $21.6 billion; net profit from $22.1 to $18.8 billion. Similarly, the operating cash flow also falls from $22.1 billion to $18.8 billion.
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Nvidia sells more servers
Meanwhile, Nvidia achieved its strongest growth not with GPUs, but with network technology. The division grows from a good $3 billion to almost $5 billion within three months. Nvidia is pushing sales of complete servers, which is reflected in higher network revenue.
Meanwhile, the stock market is delighted with Nvidia's report: the share price rises by more than four percent in after-hours trading.
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