Data Center Solutions Prop up NVIDIA Revenue Nosedive

After continued growth across several quarters despite supply chain constraints continuing to be an issue, the global economic downturn has caught up to US chip producer NVIDIA. The company generated $6.7 billion in Q2, a decrease of around $1.6 billion compared to Q1. This result can be attributed to an unprecedented nosedive in one of the chip producer's central revenue pillars.

NVIDIA is primarily known for its gaming graphics processing units (GPU), which only made up 30 percent of its total revenue between April and July and saw a revenue drop of 44 percent compared to the previous quarter. Propping up the unexpected drop in revenues is the company's data center segment, which grew by one percent. According to CEO Jensen Huang, the company is "navigating [its] supply chain transitions in a challenging macro environment and [...] will get through this" despite issuing a revenue forecast of $5.9 billion for the third quarter.

The gaming GPU market has become a duopoly over the last years, with NVIDIA and AMD as the big players and one clear winner. According to the latest monthly hardware survey by Steam, the leading online store for video games, 76 percent of participants in the July questionnaire used a card with an NVIDIA chip. Even though both companies manufacture their own graphics cards, most of the models including the respective chipsets are cards by other manufacturers. NVIDIA not only wins the graphics race by userbase but also in terms of financial aspects: According to AMD's latest quarterly report, its data center and gaming segments contributed a combined $3.2 billion towards the total revenue of $6.6 billion between April and July 2022.