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Nvidia and Amazon Web Services , the lucrative swarm arm of Amazon , have a surprising amount in mutual . For starters , their gist business organization come out from a felicitous accident . For AWS , it was realizing that it couldsell the interior services — storage , compute and memory — that it had create for itself in - house . For Nvidia , it was the fact that the GPU , created for gaming use , was also well suitedto processing AI work load .
That eventually led to some explosively growing revenue in late quarters . Nvidia ’s revenuehas been spring up at ternary finger , move from $ 7.1 billion in Q1 2024 to $ 22.1 billion Q4 2024 . That ’s a pretty awe-inspiring trajectory , although the vast legal age of that growth was in the company ’s data center business .
While Amazon never experienced that kind of intense growth spurt , it has systematically been a big gross gadget driver for the eastward - commerce giant star , and both companies have receive first market place advantage . Over the years , though , Microsoft and Google have joined the market produce the Big Three cloud vendors , and it is expected that other silicon chip Maker will eventually begin to pull ahead meaningful market percentage , too , even as the revenue pie go on to grow over the next several years .
Both company were understandably in the right position at the right-hand time . As web apps and mobile began come out around 2010 , the cloud provided the on - demand imagination . enterprise soon began to see the value of moving workload or building lotion in the swarm , rather than prevail their own data centers . likewise , as AI direct off over the last decade , and large speech models more recently , it coincided with the detonation in the usance of GPUs to process these work load .
Over the geezerhood , AWS has develop into a tremendously profitable business , presently on a run rate closely to $ 100 billion , one that even separate from Amazon would be a extremely successful company . But AWS development has start to slow down , even as Nvidia ’s takes off . It ’s partly the law of gravid numbers , something that will eventually affect Nvidia , too .
The interrogative sentence is whether Nvidia can sustain that growth to become a foresightful - term revenue powerhouse like AWS has become for Amazon . If the GPU grocery start to tighten , Nvidia does have other businesses , but as this chart shows , these are much smaller receipts generators that are growing much more slowly than the GPU data point center business organization presently is .
The short-term financial outlook
As the above chart notes , Nvida ’s revenue outgrowth has been astronomic in recent tail . And according to both Nvidia and Wall Street analysts , it ’s set to continue .
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In its recentearnings reportcovering the fourth quarter of its financial 2024 ( the three calendar month ending January 31 , 2024 ) , Nvidia recite its investors that it anticipates $ 24 billion Charles Frederick Worth of revenue in its current quarter ( Q1 FY25 ) . Compared to its year - ago first quarter , Nvidia expects to put up growth of around 234 % .
That is but not a number we often see from mature public company . However , given the company ’s massive revenue incline in late quarters , its growth pace is expected to slump . From a 22 % revenue amplification from the third to quaternary one-fourth of its recently concluded fiscal year , Nvidia look for a more modest 8.6 % growth rate from the last quarter of its financial 2024 to the first of its financial 2025 . Certainly , on a year - over - twelvemonth compare and not a look back at just three calendar month , Nvidia ’s growth rate remains unbelievable for the current stop . But there are other growth declines on the sensible horizon .
For instance , analyst expect Nvidia to generate $ 110.5 billion worth of taxation in its current financial class , up just over 81 % from its year - agone issue . That ’s dramatically humiliated than the 126 % addition it posted in its of late conclude fiscal 2024 .
To which we ask : So what ? For at least the next several quarters , Nvidia is expected to go along scale its tax revenue past the $ 100 billion annual run rate mark , impressive for a companionship that in its year - agone period today get word total revenues of just $ 7.19 billion .
In short , psychoanalyst , and to a more modest degree Nvidia , see huge buckets of growth out front for the company , even if some of the center - popping taxation ontogeny figures will slack this calendar class . It ’s unclear what happens on a slightly longer timeframe .
Momentum ahead
It seems that AI could be the gift that keep on render for Nvidia for the next several years , even as more rivalry from AMD , Intel and other chipmakers begins to come forth . Much like AWS , Nvidia will front potent competition eventually , but it controls so much of the market right on now , it can yield to cede some .
Looking at it strictly at the chip floor , not at dining table or other adjacencies , IDC show Nvidia firmly in controller :
If you seem at the board floor with these market percentage number from Jon Peddie Research ( JPR ) , a house that tracks the GPU securities industry , while Nvidia still overshadow , AMD is come in on hard :
C Robert Dow , an psychoanalyst at JPR , suppose some of these fluctuation have to do with when new product are acquaint . “ AMD make percentage point here and there depending on cycles in the grocery store — when new bill are introduced — and inventory levels , but Nvidia has been in a dominant stead for twelvemonth , and that will continue , ” Dow told TechCrunch .
Shane Rau , an IDC analyst who follows the silicon market , also expects the dominance to continue , even as trends budge and alteration . “ There are trends and countertrends , the marketplace in which Nvidia participates are giving and getting magnanimous , and growth will continue , at least for another five years , ” Rau suppose .
Part of the reason for that is Nvidia is selling more than just the chip itself . “ They ’ll deal you boards , systems , software program , services and time on one of their own supercomputers . So any of those markets are fully grown and growing and Nvidia is attach to all of them , ” he said .
But not everyone sees Nvidia as an unstoppable force-out . David Linthicum , a longtime swarm consultant and author , says that you do n’t always need GPUs , and companies are beginning to realize that . “ They say they postulate GPUs . I look at it , do some of the back of the gasbag math , and they do n’t ask them . C.P.U. are perfectly fine , ” he say .
As this happens , he thinks Nvidia will begin to slow down down and competition will loosen its fastness on the market place . “ I consider that we ’re depart to see Nvidia morph into a weaker player over the next couple of years . And we ’re sound to see that because there ’s too many reliever that are being built out there . ”
Rau say other vendors will also benefit as ship’s company expand AI use cases with Nvidia product . “ What I opine you ’ll see going forward is turn market that ’ll create tailwinds for Nvidia . But then there ’ll be other companies that also follow in those tailwinds that will benefit from AI particularly . ”
It ’s also potential that some turbulent violence will come in into play and that would be a positive consequence to keep one party from becoming too dominant . “ You almost desire kerfuffle will happen because that ’s the way markets and capitalism sour well , correct ? Someone get an other lead , other suppliers accompany , the market grows . You get established players , who are eventually disrupt by a better style to do the same affair within their food market or within conterminous markets that are cross into theirs , ” Rau tell .
In fact , we are beginning to see that happening at Amazon as Microsoft gains ground via its relationship with OpenAI and Amazon isforced to play match - upwhen it comes to AI . Whatever materialize to Nvidia in the long run , it ’s hard in the driver ’s seat right now , making money hand over clenched fist , dominating a growing market and having just about everything going its way . But that does n’t think it will always be this agency or that there wo n’t be more competitory pressure down the road .
