Two years after the launch of generative artificial intelligence reshaped Nvidia’s business, the chipmaker has gone from gaming-gear maker to a cornerstone of the tech industry. Revenue has more than tripled and profits have roughly quadrupled as Nvidia became a central supplier for AI infrastructure.
Nvidia’s fiscal second-quarter results, due this week, will mark the two-year anniversary of this transformative growth. The company recently hit a milestone by becoming the first to reach a $4 trillion market capitalization, and its stock has surged since the AI boom began following OpenAI’s ChatGPT debut in late 2022. Since the end of 2022, Nvidia’s shares have risen more than twelvefold, and they clawed higher by about 33% in the current year, closing last Friday at $177.99.
Even as the growth engine remains powerful, the pace has cooled from the feverish gains of 2023 and 2024. After five straight quarters of triple-digit revenue growth, Nvidia’s year-over-year growth slowed to 69% in the fiscal first quarter this year. Analysts polled by LSEG expect a further year-over-year jump of about 53% to $45.9 billion in the second quarter.
Data center demand continues to be the backbone of Nvidia’s business. In the most recent quarter, data center revenue accounted for about 88% of total sales, underscoring how integral AI infrastructure has become. Nvidia also noted that 34% of its total sales last year came from three unnamed customers. Among the top end users are major internet and cloud providers, including Microsoft, Google, Amazon and Meta.
Market observers say Nvidia’s performance helps shape how the broader market prices the AI opportunity. “The assumptions and performance of Nvidia really dictate what the market is going to start to price into the AI trade, and that whole AI trade has essentially been driving the market this past year,” said Melissa Otto, head of Visible Alpha Research at S&P Global.
Nvidia now accounts for roughly 7.5% of the S&P 500, highlighting its outsized influence on the index during this AI-driven era.
Beyond Nvidia, Megacap tech companies have been detailing plans to deploy large sums into AI and data-center expansion. In aggregate, they are looking to spend about $320 billion this year on AI technology and data-center buildouts.
In a development tied to the broader AI ecosystem, OpenAI has announced plans to partner with SoftBank and Oracle to invest $500 billion over the next four years in a project called Stargate, a move tied to a January announcement by former President Donald Trump.
What to watch going forward
– Nvidia’s upcoming quarterly results will provide a clearer picture of data-center demand, pricing dynamics, and how the company plans to sustain growth as AI adoption scales.
– The mix of customers and the degree of concentration remain important considerations for investors assessing revenue visibility.
– Broad AI capex trends among cloud providers and enterprise customers will influence Nvidia’s growth trajectory and the competitive landscape, including rival silicon makers.
– Regulatory and geopolitical factors surrounding AI and semiconductors could affect supply chains and investment appetite in AI infrastructure.
Overall, Nvidia’s two-year AI-driven ascent has solidified its role as a linchpin of the industry. While growth has moderated from the extraordinary surge of the past couple of years, the company remains deeply embedded in the expansion of AI-powered services and platforms, with data center demand continuing to drive the majority of its sales. A continued focus on AI infrastructure, strong customer relationships, and execution will be key as markets evaluate how high and how durable Nvidia’s momentum can be.