NVIDIA earnings blow off the ceiling, as industry DC demand outstrips hyperscalers: Company confident on Arm buyout.
Chipmaker and GPU specialist NVIDIA reported revenues of $16.68 billion for its fiscal 2021 late Wednesday, up 53% on the previous year, as GPU demand soared among gamers, data center engineers, and cryptocurrency miners. Net income was $6.2 billion – up a robust 75% to cap off a record year for the company.
Strikingly, industrial data centre demand for GPUs to power demanding workloads outstripped that of the cloud hyperscalers, CEO Jensen Huang said: “We’re seeing industrial applications across scientific computing where simulation-based approaches are now being fused with AI approaches for weather simulation, genomics, molecular dynamic simulation, quantum chemistry, even simulating quantum computing.”
NVIDIA earnings call: Arm buyout on-track.
The company’s controversial $40 billion buyout of UK chipmaker Arm is “moving forward as expected”, CFO Colette Kress told investors on an earnings call, despite some pundits describing it as “all but dead”.
The acquisition has run into strong opposition from industry rivals concerned that NVIDIA will move to gradually restrict the open nature of Arm’s ecosystem. Some of the world’s largest technology companies have reportedly written to US antitrust regulators in a bid to block the deal, first announced September 13, 2020.
“We are in constructive dialog with the relevant authorities and are confident that regulators will see the benefits to the entire tech ecosystem”, CFO Colette Kress said, adding “our intention is to increase investment in Arm’s existing road map, adding resources to stimulate growth in new markets. We love and intend to maintain Arm’s open licensing model, a commitment guaranteed by long-term legally binding contracts.”
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CEO Jensen Huang added in an analyst Q&A: “Ironically, the only CPU we don’t accelerate for AI is Arm, but we want to change that. Arm has such an exciting future because… the nature of their architecture is perfect for the future of hyperscalers and data centres. You want the most energy efficiency in every single data center because every data centre is power constrained. So we would love to build around the Arm processor and invest in building a great ecosystem around it, so that all the world’s peripherals and all the world’s applications can work on any one of the CPUs that we know today… you’re starting to see one industry leader after another embrace Arm and I think that’s terrific, but now we’ve got to energise it with all of the ecosystem support.”
Data centre momentum
Graphics processing units (GPUs) break complex problems into millions of separate tasks and work them out at once. They’ve become increasingly crucial for training deep neural nets and running physically accurate simulations of environments — whether for self-driving vehicles, medical imagery, or gaming.
With their utility for powering AI workloads in data centres, appetite has grown sharply for GPUs across the enterprise space and NVIDIA’s earnings reflected that, with data centre compute revenue up 45% year-on-year: full-year data centre revenue rose 125% to a record $6.7 billion.
“Vertical industries were well over 50% of data centre revenue across compute and networking with particular strength in supercomputing, financial services, higher education, and consumer Internet verticals”, CFO Colette Kress told analysts; an important signal of aggressive ongoing digital transformation.
An “industrialised AI” world looms
An ever-ebullient Jensen Huang took a moment on the earnings call to paint a vivid picture of an increasingly AI-powered world. NVIDIA is working with over 7,000 AI startups, he said, pointing to the rapidly emerging “industrialisation of AI.”
“Almost all of them are developing [a device with AI, that is autonomous, connected to a cloud service, and continuously learning]” he said. “Large industrial companies — whether it’s John Deere or Walmart — they are all developing applications like this; basically an autonomous system, autonomous machine.
“In the future we’re seeing that these industries — whether you’re in retail or in logistics or transportation or farming, ag tech to consumer lawnmowers — tThey’re not going to just be products that you buy and use from that point forward; they will likely be a connected device with an AI service that runs on top of it. These industries are so excited about it because it gives them an opportunity to change the way that they interact with their customers.
“Rather than selling something once, they sell something and provide a service that’s on top of that and they could stay engaged with the customers. The customers could get a product that’s improving all of the time just like your smartphone. You’re going to see smart lawnmowers, smart tractors, smart air conditioners, smart elevators, smart buildings, smart warehouses, robotic retail stores.
“The entire retail store is like a robot and they will all have autonomous capability, they’ll all be driven by AI. What’s new for the industry therefore is that all of the enterprises in the world used to have computers for IT to host their employees and their supply chain, but in the future all of these industries are going to have data centers that are hosting your products… We’re in a great position to help these industries one at a time transform their business model from the object-oriented business model, to a connected device business model.”
NVIDIA earnings call: “New era” of gaming.
The gaming laptop market meanwhile has grown seven-fold in the past seven years and momentum is building, CFO Colette Kress noted in an earnings call. “It has become clear that we’ve entered a new era in which gaming is an integral part of global culture. The number of concurrent users on Steam has more than doubled since 2018 and continues to hit new records. In 2020 alone, more than 100 billion hours of gaming content was seen on YouTube and 0.5 billion people watched eSports. Increasingly, we aren’t just gaming, we’re also watching sports, kept attending concerts, creating content, and connecting with our friends in virtual environments.
She added: “We are excited about the new experiences like VR. Significantly more content is now available including arguably the first VR killer app, Beat Saber. And there is now almost 2 million VR users on Steam. And with these powerful structural shifts, we expect our Gaming business to remain on a robust growth trajectory.”