NVIDIA’s data center revenue

After gaming, NVIDIA’s (NVDA) second largest and the fastest growing business is Data Center, which accounts for ~25% of its revenue. However, macroeconomic weakness hurt the company’s data center business and it reported its first sequential revenue decline in more than three years.

Should Investors Worry about NVIDIA’s Data Center Revenue Declines?

In the fourth quarter of fiscal 2019, NVIDIA’s data center revenue rose 12% YoY but fell 14% sequentially to $679 million. During the quarter, revenue fell by $113 million in the Data Center segment as rising economic uncertainty made customers across verticals, markets, and geographies cautious. Several customers paused their capital spending temporarily, and as a result, NVIDIA could not close its deals in January.

Intel (INTC) was also hit by a decline in data center capital spending. Its YoY revenue growth from cloud companies halved from 50% in the third quarter to 24% in the fourth quarter. However, the overall cloud capital spending in 2019 was up 70%, which led to NVIDIA’s full-year fiscal 2019 Data Center revenue rising 52% YoY to $2.93 billion. While Intel and NVIDIA experienced a slowdown in the data center market, rival Advanced Micro Devices (AMD) is showing strength.

NVIDIA versus AMD in the data center market

AMD reported record data center GPU (graphics processing unit) sales of around $100 million in the fourth quarter of 2019 as it secured design wins from Internet giants like Microsoft, Amazon, and Baidu. While AMD is winning contracts, NVIDIA is struggling to strike new deals, indicating that the former is taking market share from the latter.

AMD expects data center sales to be slow in the first quarter of 2019, but pick up in the second half of 2019 as it launches its complete portfolio of 7-nm (nanometer) data center processors including Radeon Instinct Vega GPU and Rome CPU (central processing unit). These 7-nm processors will give AMD a process node advantage over NVIDIA’s 12-nm Turing data center GPU and Intel’s 14-nm Xeon CPU.

Despite rising competition and slowing cloud spending, NVIDIA is optimistic about its data center opportunity and believes that this segment will drive future growth. We’ll look into this opportunity next.

Check out all the data we have added to our quote pages. Now you can get a valuation snapshot, earnings and revenue estimates, and historical data as well as dividend info. Take a look!

Latest articles

16 Jul

PG&E Stock Continued to Slide on July 15

WRITTEN BY Vineet Kulkarni

The large swings for PG&E (PCG) stock may not end anytime soon.

On Wednesday, United Rentals is scheduled to report its second-quarter results after the market closes. The stock beat analysts' estimates in 12 of the last 13 quarters.

16 Jul

Q2 Earnings Were a Mixed Bag for J.B. Hunt

WRITTEN BY Anirudha Bhagat

J.B. Hunt reported mixed Q2 earnings, as its revenues grew YoY but earnings declined.

16 Jul

What to Expect From Nucor’s Q2 Earnings This Week

WRITTEN BY Mohit Oberoi, CFA

Nucor is scheduled to release its second-quarter earnings on Thursday. The company has seen an upwards price action of 7.4% year-to-date.

16 Jul

Will HollyFrontier's Q2 Results Improve?

WRITTEN BY Maitali Ramkumar

HollyFrontier (HFC) is expected to release its second-quarter results on August 1.

On Monday, Citigroup downgraded Tiffany (TIF) stock to “neutral” from “buy” and reduced its target price to $100 from $115 per share.