The S&P 500 has gained around 26% over the past year, with Nvidia (NASDAQ: NVDA) being one of the top-performing tech stocks in the United States. The company’s graphics processing units (GPUs), which power the ongoing artificial intelligence (AI) revolution, have seen surging demand, particularly in the data centre segment.
This heightened demand has bolstered Nvidia’s financial performance, driving its stock price up by more than 185% in a year. However, the stock’s momentum has slowed in the past month due to concerns over margin pressures and potential reductions in AI-related spending.
Despite these near-term headwinds, Nvidia’s long-term outlook remains strong. Its leadership in AI chip technology, continued innovation, and new product launches solidify its position as a leader in this fast-growing industry. Thus, Nvidia is well-positioned to capture a substantial share of the AI market and sustain remarkable growth. Let’s dig deeper.
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Data centre business to boost financials
Nvidia delivered incredible growth over the past several quarters. In the third quarter (Q3) of 2024, Nvidia’s revenue skyrocketed 94% year over year, reaching an impressive $35.1 billion. This massive growth reflects the growing adoption of its accelerated computing and AI platform.
Thanks to the stellar demand, Nvidia’s data centre business achieved record sales. Revenue from this segment reached $30.8 billion, marking a 17% sequential increase and 112% year-over-year growth. This surge highlights the strong momentum in Nvidia’s AI-focused offerings, particularly the Hopper platform.
This momentum in Nvidia’s business will likely be sustained in 2025, driven by solid demand for its Hopper platform. The Hopper H200 saw its sales surge to double-digit billions in Q3, achieving the fastest product ramp-up in the company’s history.
The demand for Nvidia’s H200 infrastructure is poised to remain strong. Cloud service providers are rapidly deploying this technology to support the growing needs of AI training and inference workloads. This implies that Nvidia’s GPUs are the backbone of modern AI infrastructure, ensuring the company’s financial momentum continues into 2025.
In addition to cloud service providers, consumer internet companies are driving significant demand for Nvidia’s Ampere and Hopper infrastructures. As the largest inference platform globally, Nvidia is well-positioned to benefit from this sustained demand.
Nvidia is also ramping up production of its latest Blackwell chip. This product is likely to add billions to its top line. The company’s management noted that Blackwell product demand significantly exceeds supply, which will drive its sales. Moreover, the company’s sovereign cloud solutions are gaining traction, opening up new avenues for growth.
Expanding revenue streams
While the data centre business takes centre stage, Nvidia’s other segments are also contributing to its impressive performance. The gaming division, for example, is rebounding, fueled by strong demand for RTX products. The recent launch of GeForce RTX AI PCs is expected to further boost sales in this category.
Meanwhile, Nvidia’s automotive division is thriving, with Q3 revenue hitting a record $449 million, up 30% sequentially and 72% year over year. The growth is driven by the adoption of Nvidia Orin in self-driving technologies and robust demand for next-generation automotive solutions.
Bottom line
Nvidia’s robust product portfolio, led by the Hopper and Blackwell platforms, positions it well to meet solid AI-driven demand. Moreover, its growing revenue streams and new product launches set the stage for long-term growth.
