Nvidia rakes in more than $22 billion in a single quarter on the back of surging AI demand

You don't need ChatGPT to tell you that AI is big business. Nvidia is making an absolute killing. Yet, for all the buzz and talk about AI, and Nvidia's understandable shift of attention to where the big money is, its gaming business continues to thrive.

Nvidia released its fourth quarter earnings on Wednesday, raking in $22.1 billion in revenue for the quarter, up 265% from a year ago. Its revenue from data centers, where the big AI bucks come from, was up by over 400% from the same period last year, reaching $18.4 billion.

Analyst expectations were for $20.55 billion, so these results were ahead of expectations. Still, Nvidia shares are down by over 7% over the last five days at the time of writing. However, those losses were reversed in after hours trade, surging by up to 10%, largely on the back of guidance for the next quarter. Nvidia is forecasting an even higher revenue of $24 billion for the first quarter of 2024.

The company released its full year results at the same time, reporting revenue of $60.9 billion and net income of $29.76 billion. What caught my eye was the gross margin of 72.7%. That's, uhh, pretty astonishing! And, its forecast for the next quarter is for gross margins to hit 76.3 %. The money printer is going to need an oil change.

Nvidia's founder and CEO, Jensen Huang, explained: "Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations." 

Nvidia's GTC is scheduled to take place from March 18. Its focus will be—you guessed it—AI. Huang is expected to preview the B100 GPGPU which will no doubt be in high demand from the Googles, Metas and Amazons of the world. But with Huang saying that AI is at a 'tipping point' and other industries including auto, financial services and healthcare ramping up AI integration, it's hard to see demand for AI products and services dropping off anytime soon. 

The gaming results are very interesting. Nvidia's 4th quarter revenue was $2.9 billion, flat from the previous quarter, but up by 56% from a year ago. That's yet more evidence that the desktop PC market is recovering from the post-pandemic doldrums. Full-year revenue rose 15% to $10.4 billion. For all the talk of Nvidia becoming an AI company, it's still making very good coin from its gaming GPU business. GeForce ain't going anywhere folks!

In advance of the earnings report, Nvidia briefly overtook Google and Amazon in market capitalization, becoming the fourth-largest company in the world. It fell back a little from those highs, but with a surge in after hours trade, its B100 mega chip to come in 2024, and demand for generative AI hardware showing little sign of slowing down, one shouldn't bet against Nvidia beating expectations yet again in the upcoming quarters.

I'm no financial advisor but I do wish I had sold the house and any non-essential body parts and bought Nvidia shares at 60 bucks back at the start of 2020. That would have netted you an easy 10x in just four years. Coulda, shoulda, woulda…