Chip-making behemoth Nvidia’s earnings for its fiscal third quarter were driven by a rise in data center demand, deepening relationships with cloud service providers and high demand for its GPU chips, Chief Financial Officer Colette Kress said during the company’s fiscal third quarter earnings call Tuesday. 

The company recorded net income of $9.2 billion, up 1,259% year over year, along with record revenue of $18.1 billion, up 206% YoY.

Nvidia is seeing demand in “AI, in financial services and supercomputing, and quantum computing” and aims to optimize its cloud services for enterprise customers, President and Chief Executive Jensen Huang said during the call. 

Cloud boom

The $1.1 trillion company is expanding relationships with cloud providers, including Google Cloud, Amazon Web Services and Oracle, as nearly half of its data center revenue was driven by cloud providers, Kress said. Data center revenue was $14.51 billion in Q3, up 279% YoY, the company reported. 

To keep the cloud momentum, Nvidia announced Tuesday that it has teamed with Microsoft to create “an advanced cloud-based AI supercomputer to help enterprises train, deploy and scale AI, including large state-of-the-art models,” Kress said. 

AI demand 

The Santa Clara, Calif.-based Nvidia also saw high Q3 demand for its AI solutions among enterprise clients and consumer-facing companies as service providers lean on the technology to increase efficiency and add products, Kress said. 

“The enterprise wave of AI adoption is now beginning,” she said. “Consumer internet companies and enterprises drove exceptional sequential growth in Q3, comprising approximately half of our data center revenue and outpacing total growth.” 

Companies like Meta, which has been using Nvidia GPUs and AI solutions since 2022, are developing AI capabilities to help advertisers optimize images and text for higher engagement, while enterprise companies like Adobe, cloud service provider Databricks, and Snowflake are adding AI copilots and assistants in their product pipelines, Kress said. AI copilots are advanced AI tools that work alongside humans.  

BY THE NUMBERS: In its fiscal Q3, Nvidia reported: 

• Operating expenses of $2.9 billion, up 16% YoY. 
• Operating income of $11.5 billion, up 652% YoY. 

NOTEWORTHY: Nvidia teamed up with Oracle Cloud during the quarter to provide its AI models to Oracle customers in health care, scientific research, financial services, telecommunications and other sectors, according to an Nvidia Oct. 19 release. 

Deutsche Bank, Waafi Bank and Banco Voiter are among the banks that use Oracle Cloud services, according to the company’s website.   

FLASHBACK: Nvidia has been expanding generative AI services for the financial services industry and sees tremendous growth opportunity in the sector, Malcolm deMayo, global vice president of financial services, previously told Bank Automation News. 

Generative AI “will be used to create better investment strategies, more personalized content, more accurate customer service solutions, and faster fraud and compliance investigation,” he said. 

FORWARD LOOK:  Nvidia has offset losses caused by export bans on A100 and H100 chips used for supercomputers to China and softer demand in the country by selling other goods in the country, Kress said. 

Nvidia is working “with some customers in China and the Middle East to pursue licenses from the U.S. government” to export certain kinds of chips, but it’s too early to tell what impact that might have on the company’s revenue, she said. 

MARKET REACTION: Shares of Nvidia [NYSE: NVDA] were down 2.30% from market open to $487.94 at 3:30 PM today. Nvidia has a market capitalization of $1.1 trillion. 

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