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May 17, 2019updated 14 Jul 2022 10:42am

NVIDIA Revenues Tumble, Hyperscale Sales Slump

NVIDIA on data centres: “Not the best visibility going forward.”

By CBR Staff Writer

NVIDIA’s revenue for the first quarter of 2019 came in at $2.2 billion (£1.7 billion)  a slump of 31 percent year-on-year. Even with the massive drop the company’s shares were up six percent in after-hours trading as it beat market expectations.

Commenting on the resultsCEO Jensen Huang said: “NVIDIA is back on an upward trajectory. We’ve returned to growth in gaming.”

A large part of the company’s revenue in future quarters is expected to be driven by the gaming industry and demand for GPUs, as well as growing support for Ray tracing, which is set to become an industry standard in the next generation of gaming.

In a call with investors Huang pointed to China as a huge source of future income stating that he believes the market there is recovering: “I think China has stabilised.”

“There’s some 300 million PC gamers in China and people are expecting it to grow. We’re expecting the total number of gamers to continue to grow from the 1+ billion PC gamers around the world to something more than that. And so, things look fine.”

This quarter saw a slew of gaming GPU architecture coming out of the company as it released the GeForce GTX 1660 Ti, 1660 and 1650. All aimed at the high-end PC market.

NIVDIA Datacentre Sales

Recently NIVDIA has made a concerted effort to push into the datacentre market. It has  unveiled new server configurations such as the RTX server, which has 40 GPUs packed into an 8U blade server form factor: a server design which it believes is “optimized for three data center graphic workflows rendering, remote, workstation and cloud gaming.”

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Revenue for the datacentre side of the business though was $634 (£496)  marking a drop of ten percent year-on-year. NVIDIA blames part of this drop on what they call a ‘pause in hyperscale spending’. It believes that the market created too much capacity for hyperscale and that “Hyperscale are digesting the capacity they have,” said Huang.

Pointing to the edge, the company notes that it is seeing a lot of interest in its servers designed for edge computing. As AI systems grow and the data that they have to process expands to incredible scales, Huang believes that much of the processing of AI capabilities will happen in or close to the edge.

“It’s too much data to move all the way to the cloud. You might have data sovereignty concerns, you want to have very, very low latency, maybe it needs to have multi-sensor fusion capabilities, so it understands the context better. For example, what it sees and what it hears has to be harmonious. And so, you need that kind of AI, those kind of sensor computing at the edge,” he commented to investors.

NVIDIA also cited challenges in completing some deals at the end of the quarter that affected datacentre revenue. However, speaking to investors Colette Kress Executive VP of NVIDIA highlighted a major issue for the company and that is one of visibility in the market, she stated that what they have in terms of visibility: “Not the best visibility going forward.”

“We’ll just have to see as we go forward how this turns out. But right now, visibility probably just remains the same about as where we were when we started three months ago.”

See Also: NVIDIA DGX-2 Smashes Trading Benchmark

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