Nvidia Dominance in AI Workloads Boosts Revenue
Nvidia, the company behind the world's best graphics processing units (GPUs) for data centers, has reported impressive second-quarter results. The company's revenue doubled in Q2, and its stock continues to trade at an attractive valuation.
The growth is driven by Nvidia's dominance in AI workloads, with its Vera Rubin systems providing up to 30 times more performance per megawatt than its previous Blackwell Ultra systems. This innovation has reduced inference token costs by a staggering 97% compared to the older system.
Nvidia's data center segment accounted for $89 billion of its total revenue in Q2, growing at an even faster rate of 117%. The global shortage of AI chips and components is giving Nvidia an unprecedented ability to dictate prices, benefiting its bottom line. Adjusted earnings surged by 120% to $2.22 per share during the second quarter.
However, there are concerns about Nvidia's circular financing deals with major AI customers. The company has invested directly into these companies and partially financed their purchases of GPUs and other hardware. Around 25% of Nvidia's sales in fiscal 2028 are expected to come from customers it has financed in some way.