The Chinese who can make the most money will absorb 188 billion in three months

Chinese entrepreneur

2024-05-24 13:49Published on the official account of Beijing "China Entrepreneur" magazine

Text: "Chinese Entrepreneur" reporter Deng Shuanglin

Editor|Li Wei

Image source: Visual China

On May 23, Nvidia delivered a financial report that shocked the global business community: in the first quarter of fiscal year 2025 as of April 28 this year, Nvidia's revenue was 26 billion US dollars (about 188 billion yuan), an increase of 262% over the same period last year; The profit was as high as a staggering US$14.9 billion (about 107.8 billion yuan), a significant increase of 628% and a six-fold increase compared with US$2.043 billion in the same period last year.

What is this concept? In the entire fiscal year of 2023, Nvidia's revenue will only be $27 billion, and the revenue of one quarter of fiscal year 2025 will be worth the past year. What's even more incredible is Nvidia's profit margin - Nvidia made more money in a quarter than Alibaba, Tencent, Baidu, and Xiaomi combined in the latest quarter.

After the earnings release, Nvidia's stock price broke through $1,000 in history, closing at $1,037.99. In 2022, Nvidia's stock price hit a low of just $107, an increase of nearly 10 times in two years. And investors are still optimistic about Nvidia's performance in the capital market.

Nvidia stock price on May 23, 2024.

Morgan Stanley raised its price target on Nvidia to $1,160 from $1,000, Wells Fargo raised its price target on Nvidia from $1,150 to $1,250, Mizuho raised its price target on Nvidia from $1,000 to $1,180, and Goldman Sachs raised its price target on Nvidia from $1,100 to $1,200.

As of press time, Nvidia's latest market capitalization reached $250 million, soaring by nearly $220 billion in one day, exceeding the combined market value of all listed companies in Germany and second only to Microsoft and Apple in the U.S. stock market.

Nvidia founder Jensen Huang's personal wealth also jumped to $91.3 billion due to the soaring market value of Nvidia, surpassing the three heirs of the Walmart founder family in one fell swoop and rising to the 17th place on the list of the world's richest people.

A year ago, ChatGPT sparked a wave of generative AI chase, of which the most beneficiary is Nvidia - as a role to provide "shovel" in the "nuggets", Nvidia's GPU is almost irreplaceable, AI model manufacturers have spent huge sums of money to buy Nvidia's GPU, Nvidia's sales have surged, and it is still in short supply until now.

Nvidia has reached a crazy "money printing machine", and its founder, Jensen Huang, has become the hottest superstar in the global tech world. This Chinese American, who is known as the "most profitable", will cause bursts of cheers every time he appears on the podium in a black leather jacket.

Huang once admitted in an interview that he would make money, saying that "making money is not that difficult, it's a learnable skill that other people can do." And in Huang's view, Nvidia's pace of making money will not stop.

"With the launch of the next generation of Blackwell architecture chips, the company is gearing up for the next wave of growth." Huang said in the earnings report. It has been revealed that the much-talked-about Blackwell platform has been put into full production, and shipments are expected to begin in the second quarter of fiscal year 2025.

Nvidia's "strongest financial report in history"

NVIDIA's most important revenue generation still comes from its data center business. The business hit an all-time high, contributing $22.5 billion in revenue for the quarter, up 427% year-over-year.

Colette Kress, CFO of Nvidia, explained on the earnings call: "The growth of the center business is due to the increase in shipments of Hopper architecture GPUs (such as H100). He said that customer demand is very strong in different segments, with enterprise and consumer Internet companies being the most obvious, and large cloud service providers are deploying and upgrading their infrastructure while also bringing revenue to data centers.

Nvidia's other core businesses are also relatively solid: gaming and AI PC business, with related revenue of $2.6 billion in the first quarter, up 18% year-on-year; Professional visualization business revenue was $427 million, a year-on-year increase of 45%; Automotive & Robotics revenue was $329 million, up 11% year-over-year. Overall, these businesses achieved double-digit growth compared to the same period last year.

According to the latest financial report, Nvidia's main customers come from Amazon, Meta, Microsoft, and Alphabet, which account for about 40% of Nvidia's sales. These companies are important competitors in the AI race, and their capital investment in the AIGC field is "inhumane".

Colette Kress said on the earnings call that the company added new products to the Chinese market that do not require a license. Since the promulgation of the new U.S. export policy last year, the revenue of the Chinese market has had a significant impact. Previously, Nvidia launched a "special version" GPU H20 for the Chinese market that bypasses the restrictions of technical barriers, and pre-orders have begun to be accepted in March, but it has not yet been shipped.

Huang also acknowledged that the Chinese market is a challenge for Nvidia right now, saying on the earnings call: "Nvidia's performance in the Chinese market is really declining because Nvidia's strongest technology is not available." This also makes the competition that Nvidia encounters in the Chinese market extremely fierce. ”

Not only is it making money, but Nvidia is also stepping up its efforts to divide money. Nvidia announced a stock split plan to split 10 shares for 1 share and increase its quarterly dividend by 150% to 10 cents per share. Nvidia expects second-quarter revenue to reach $28 billion, compared to analysts' expectations of $26.61 billion.

"The next industrial revolution has begun"

Huang isn't afraid not to make money, because he has a steady stream of new "ammunition" in his hands, from tech giants to startups, all queuing at the door to pay for it.

Since the explosion of demand for generative AI last year, the performance of NVIDIA's GPU chips has been continuously upgraded. As companies lined up for A100 and H100 GPUs, Huang dropped a more advanced, faster, safer, and more energy-efficient bomb — the B200 and GB200 series of Blackwell-based GPU chips.

HSBC reported that Nvidia's chip pricing has risen further, with the GB200 having an ASP (average selling price) of $60,000 to $70,000, while the ASP of the discrete B100 GPU is $30,000 to $35,000.

Huang said that with the launch of the next generation of Blackwell architecture chips, Nvidia will usher in the next wave of growth.

"We're going to see a lot of Blackwell chip revenue this year [in the earnings report]. Blackwell chip products are shipped in the current quarter, increased production in the third quarter, and put into the data center in the fourth quarter. Huang emphasized during the earnings call.

He also expressed the pressure on the market demand for NVIDIA, which currently has about 15,000~20,000 generative AI startups waiting to become NVIDIA customers in order to train models through NVIDIA chips.

Huang revealed that Musk bought 35,000 GPUs from him: "We helped Tesla scale its AI training cluster to 35,000 H100 GPUs, and they relied on our infrastructure to achieve FSD (Full Self-Driving) vision-based breakthrough on the recent FSD 12." ”

Tesla's latest earnings report also mentions this information, with 35,000 Nvidia's H100 GPU superchips installed, and this number is expected to grow to 85,000 by the end of this year.

Zuckerberg also said that by the end of the year, Meta will have multibillion-dollar H100 GPUs.

However, the almost monopoly position does not mean that Nvidia can sit back and relax. Countless investors, entrepreneurs, and large companies have set their sights on Nvidia's business.

OpenAI CEO Altman is trying to raise $7 trillion to build his own chip company; Japan's SoftBank founder Masayoshi Son is seeking up to $100 billion to invest in AI chip companies; The LPU (Language Processing Units) chip developed by a chip company called Groq claims to be 10 times faster than Nvidia's GPU; Nvidia's old rivals Intel and AMD are also grabbing share, and Nvidia's major customers are also trying to develop their own alternative chips.

But in Huang's view, none of them can fight.

"Only we have a full grasp of all the data, we build everything, every link. We built everything with our own hands, not just a good-looking PPT. Only we can optimize it all at scale. This deep integration of knowledge at the scale of the data center is the most essential thing that distinguishes us from others. He said on the earnings call.

As the biggest winner in this wave of AI, Huang shouted that "the next industrial revolution has begun." At the heart of this industrial revolution is the mass production of a completely new product, Token, for the first time. Tokens, or floating-point numbers, have great value, they represent artificial intelligence, and can be recombined into languages, proteins, chemicals, graphics, images, videos, robot drives, and other forms.

AI will bring significant productivity gains to almost every industry, and Nvidia's role is to build an AI factory, not just about chips, but as a system supplier.

Resources:

"Nvidia, 6 times more skyrocketing! 21st Century Business Herald

"Nvidia Burst! Net profit soared nearly 630% year-on-year, and the stock price rose above $1,000 after hours, "demand is too high", CEO: The next industrial revolution has begun", National Business Daily

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