Nvidia recently reported impressive earnings, with a 101% year-over-year growth, reaching $13.5 billion for the quarter. The company’s success can be attributed to the high demand for its GPU chips, which are utilized in running large language models and other AI-driven workloads. This growth is reminiscent of the surge experienced by cloud stocks during the pandemic, with Zoom being a prime example. While Zoom’s growth rate has declined in recent quarters, the company has still managed to retain its prior scale and continued to grow.
The data center sector is where Nvidia is seeing significant growth, fueled by web scalers who are rapidly constructing new data centers. According to a report from Synergy Research, over 300 new data centers are expected to be built in the coming years. As hyperscale operators focus on cloud revenues and AI workloads, Nvidia stands to benefit from increased spending in these areas. Nvidia’s CEO, Jensen Huang, believes that this growth is not just a temporary trend, but rather a long-term industry transition.
However, the cautionary tale of Zoom raises questions about the sustainability of Nvidia’s growth. While Zoom has managed to retain its revenue, its growth rate has significantly slowed down. It remains to be seen if Nvidia can maintain its current level of growth or if history will repeat itself.
