Nvidia posts record quarter despite rising capital expenditure

Chipmaker Nvidia, now the world's most valuable company, announced record-breaking quarterly profits on Wednesday, fueled by soaring global demand for AI computing power.

"The world's demand for AI processing tokens is growing at an exponential rate," CEO Jensen Huang remarked during an analyst call. "This surge is so significant that even our six-year-old cloud-based GPUs are running at full capacity, driving prices upward."

The company's quarterly revenue reached $68 billion, a 73% increase year-over-year, with its data center segment contributing $62 billion of that total.

Within data centers, Nvidia reported $51 billion from compute products, primarily GPUs, and $11 billion from networking solutions like NVLink. Full-year revenue climbed to $215 billion.

Despite recent U.S. government easing of some export controls, Nvidia recorded no China revenue from restricted chips this quarter. Chief Financial Officer Colette Kress noted, "While U.S. approvals were granted for small shipments of H200 products to Chinese customers, these have not yet translated into revenue, and future import permissions remain uncertain."

"Our competitors in China, empowered by recent public listings, are advancing," she continued, alluding to firms like Moore Threads. "They have the long-term potential to reshape the global AI industry landscape."

During the investor discussion, Huang also commented on the company's prospective $30 billion investment in OpenAI.

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"We are making progress in our partnership discussions with OpenAI and believe we are nearing an agreement," Huang stated. He also mentioned collaboration with Anthropic, Meta, and xAI. However, SEC filings from the same day stressed there was "no guarantee" the investment would be finalized.

Huang addressed questions about the long-term viability of major tech capital expenditure, expressing confidence that current compute investments will quickly become revenue-generating.

"In the AI-driven economy, computational power directly translates to revenue," Huang explained. "You cannot create valuable AI tokens without substantial compute resources, and without those tokens, revenue growth stalls. We have passed a critical threshold where the tokens generated are both profitable for cloud providers and deliver real value to customers."