Pay Close Attention to This Crucial Revenue Source for Artificial Intelligence (AI) Giant Nvidia

1 month ago 11

Chris Neiger, The Motley Fool

Tue, Apr 29, 2025, 3:30 AM 4 min read

Nvidia (NASDAQ: NVDA) has rapidly risen from an obscure semiconductor institution to go a household name. The company's occurrence has chiefly been driven by its skyrocketing information halfway sales, which person boomed arsenic exertion companies perpetrate hundreds of billions of dollars to physique the astir precocious artificial quality (AI).

The latest probe from The Motley Fool shows that Nvidia easy leads the battalion erstwhile it comes to information halfway sales, with $35.5 cardinal successful the 4th fourth of 2024. For reference, Nvidia's closest information halfway competitor, International Business Machines, had conscionable $4.2 cardinal successful information halfway income during the aforesaid period.

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But however harmless is Nvidia's astir important gross root against the backdrop of President Donald Trump's tariffs and a imaginable economical slowdown? Here's what investors should wage adjacent attraction to.

A idiosyncratic looking astatine machine screens.

To recognize conscionable however important Nvidia's information halfway processor income are to the company, see these stats:

Nvidia's information halfway gross roseate 884% betwixt Q4 2022 and Q4 2024
Data halfway income relationship for 88% of the company's full revenue
Nvidia's information halfway income soared 142% successful 2024 alone

Nvidia doesn't supply circumstantial gross borderline figures by gross segment, but with the immense bulk of the company's income coming from information centers, it's harmless to presume that of the company's 75% gross margin, astir is coming from its information halfway segment. This has made Nvidia precise profitable, with the institution raking successful $2.99 successful adjusted (meaning not gathering mostly accepted accounting principles) net per stock past year, up 130% from the erstwhile year.

Large tech companies, including Amazon, Alphabet, Microsoft, Meta Platforms, and others person each tapped Nvidia's processors for their information centers, but request for its processors is planetary arsenic well.

"Countries crossed the globe are gathering their AI ecosystem arsenic request for compute infrastructure is surging," Nvidia Chief Financial Officer Colette Kress said connected the company's caller net call.

Semiconductors are exempt from Trump's tariffs for now, but that mightiness not ever beryllium the case. The White House has said it's looking into semiconductor tariffs, and Trump has said they could beryllium coming soon.

That's wherefore Nvidia precocious announced that it's moving manufacturing of its Blackwell processor, its astir almighty chip, to the U.S. It volition instrumentality immoderate clip for this modulation to occur, with Nvidia saying it volition hap implicit the adjacent 12 to 15 months.