Nvidia Q4 revenue dips 21% to $6.05B as downturn takes its toll

Nvidia reported its quarterly revenue for the fourth fiscal quarter ended January 29 was $6.05 billion, down 21% as the downturn took its toll on the AI and gaming chip maker.

But generative AI is expected to create a significant opportunity that will accelerate this year, said Colette Kress, chief financial officer, in a call with analysts.

GAAP earnings per diluted share for the quarter were 57 cents, down 52% from a year ago and up 111% from the previous quarter. Non-GAAP earnings per diluted share were 88 cents, down 33% from a year ago and up 52% from the previous quarter.

For fiscal 2023, revenue was $26.97 billion, flat from a year ago. GAAP earnings per diluted share were $1.74, down 55% from a year ago. Non-GAAP earnings per diluted share were $3.34, down 25% from a year ago.

“AI is at an inflection point, setting up for broad adoption reaching into every industry,” said Jensen Huang, CEO of Nvidia, in a statement. “From startups to major enterprises, we are seeing accelerated interest in the versatility and capabilities of generative AI.”

He added, “We are set to help customers take advantage of breakthroughs in generative AI and large language models. Our new AI supercomputer, with H100 and its Transformer Engine and Quantum-2 networking fabric, is in full production.”

Gaming’s recovery

Huang said the company’s graphics processing units (GPUs) for gaming are in recovery mode. Kress said gaming revenue was $1.83 billion down 46% from a year ago, but it was up 16% from the previous quarter. The year-on-year decline was based on an inventory correction that is now behind the company, Kress said. She said China in particular has begun to recover.

“Gaming is recovering from the post-pandemic downturn, with gamers enthusiastically embracing the new Ada architecture GPUs with AI neural rendering,” he said.

For the fiscal year, gaming revenue was down 27% to $9.07 billion. During the quarter, Nvidia unveiled the GeForce RTX 40 Series for laptops, providing the company’s largest-ever generational leap in performance and power efficiency.

It also launched the GeForce RTX 4070 Ti, which is faster than the GeForce RTX 3090 Ti, featuring Nvidia Ada Lovelace architecture and Nvidia DLSS 3 technology.

The company said that DLSS 3 is available on, or coming soon to, more than 50 games and apps — including Cyberpunk 2077, Portal with RTX and Marvel’s Spider-Man: Miles Morales.

Nvidia also launched its GeForce Now Ultimate membership tier, delivering GeForce RTX 4080-class performance with Nvidia Reflex, full ray tracing and DLSS 3. And it signed a 10-year agreement with Microsoft to bring the Xbox PC game lineup, including Minecraft, Halo and Flight Simulator, to GeForce Now.

And Nvidia is partnering with leading cloud service providers to offer AI-as-a-service that provides enterprises access to Nvidia’s world-leading AI platform.

Customers will be able to engage each layer of Nvidia AI – the AI supercomputer, acceleration libraries software or pretrained generative AI models – as a cloud service, the company said.

Using a browser, they will be able to engage an Nvidia DGX AI supercomputer through the Nvidia DGX Cloud, which is already offered on Oracle Cloud Infrastructure, with Microsoft Azure, Google Cloud Platform and others expected soon. At the AI platform software layer, they will be able to access Nvidia AI Enterprise for training and deploying large language models or other AI workloads. And at the AI-model-as-a-service layer, NVIDIA will offer its NeMo and BioNeMo customizable AI models to enterprise customers who want to build proprietary generative AI models and services for their businesses.

In an analyst call, Huang said, “We are putting in place the infrastructure to put AI in reach of every enterprise customer.”

Further details will be shared at the company’s GTC developer conference, taking place virtually March 20-23. (I’m going to moderate a panel in the enterprise metaverse at GTC on March 22).

For the first quarter of fiscal 2024, Nvidia expects revenue to be $6.5 billion, and non-GAAP gross margins are expected to be 66.5%.

“There is no question that this is a great moment for the computer industry,” Huang said in an analyst call.

He said the level of activity around AI has accelerated and this is a key moment.

Datacenter

Fourth-quarter revenue was $3.62 billion, up 11% from a year ago and down 6% from the previous quarter. Fiscal-year revenue rose 41% to a record $15.01 billion.

Nvidia announced a partnership with Deutsche Bank to extend the use of AI in the financial-services sector. Nvidia also saw its chips used in 15 next-generation Dell PowerEdge systems available with Nvidia acceleration, enabling enterprises to use AI to efficiently transform their business.

Professional visualization

Fourth-quarter revenue was $226 million, down 65% from a year ago and up 13% from the previous quarter. Fiscal-year revenue was down 27% to $1.54 billion.

Enhanced Nvidia Omniverse Enterprise’s capabilities to help teams build connected 3D pipelines and develop large-scale 3D works through increased performance, generational leaps in real-time RTX ray and path tracing, and streamlined workflows.