Why do you think that?
Nvidia revenue for the financial year 2021: 26.9 B.
Gross profit: 17.5B.
EPS: 3.91
Nvidia revenue for the financial year 2022: 26.9 B.
Gross profit: 15.3B.
EPS: 1.76
I can’t address your question because your presumption of ‘growth doing well’, is contrary to reality as shown in the accounts.
NVIDIA had a spectacular year during covid because of lockdown spending on gaming PCs, and a massive crypto bubble (which is now in reverse and causing used GPUs to be dumped cheaply on the market).
That’s not well managed growth, that’s a company finding a lottery ticket on the ground. They responded to it by raising prices and margins to the maximum and screwing their customers, and killing the golden goose in gaming.
Now Intel is competing with them hard for market share in PC gaming and shortly in AI accelerators too (I have no position in Intel). A huge number of PC gamers have migrated to consoles and handhelds instead (almost all of which use AMD GPUs). (I have no position in AMD).
Having said that, I think NVIDIA will have a bumper year in 2023 from datacenter sales, offset by weak GPU sales unless they come out with something radical* or unless recession arrives earlier than expected. I think they will once again be left with a glut of overpriced and rapidly aging inventory they cannot shift (currently they are placing rush orders with TSMC). And I think Intel, AMD, and various cloud offerings will benefit the following year, from having newer and hopefully better inventory to offer based on more modern production.
In any event it will be hard to guess what NVIDIA’s earnings are going forwards, because when a hype/mania surrounds a company to this degree, it becomes in the C-level’s interests to find ways to ensure the figures in the books are as good as they can be in the current year, regardless of what’s happening on the ground, or what happens to the long-term.
- radical would be e.g. an equivalent to the 1080 ti, 2070 super, or 3080, each of which were regarded as excellent ‘great value / high-end’ cards of their era. A well-priced 16GB 4070/4080 class card, supplied in great quantities, could achieve this. e.g. taking unsold/poorly binned AD103 chips, giving them 16GB of ram for $1000, or repricing the 4080 down to that level, would be a quite popular premium product. At the low end they really need something to replace the 3060 12GB, which is the most popular gaming card registered in Steam (biggest gaming site). The freshly announced 4060 ti 16GB has the potential to do it, but the price is too high. It needs to be $100 less, at least, maybe even $150.
However NVIDIA may be sniffing their own AI/datacenter farts to such an extent they refuse to ‘waste’ good chips or concede margin in gaming by offering fair valued consumer cards again. In fact I’m getting the feeling NVIDIA, having been nursed to greatness by gaming consumers for over 20 years, suddenly doesn’t give much of a damn about them at all.
In which case, AMD/Intel will be given further opportunity to catch up and gain marketshare. If NVIDIA concede gaming sales to Intel/AMD in order to chase present business AI spend, they will see a short-term boost to profits, being one of the few games in town for business AI, but their sales/profits will become more cyclical aligned with the business IT cycle. Whereas currently they benefit from not specifically aligned with either consumer spending cycles or business spending cycles.
There’s also an issue of brand. Gamers and datacenter techies and AI researchers are the same people! That’s a big part of why so many gaming GPUs ended up in datacenters so easily, and why AI researchers had easy access to powerful accelerators. They are gamers. NVIDIA is currently annoying gamers such as myself with their greed in relation to product lines recently. I’ll consciously try to put money to Intel/AMD as a result of that, both in my personal and professional work; good value, and concern for the customer base, is something I pay attention to. And I know most other techies feel the same way. It’s not like buying a car.
In short:
2023 : good year
2024-2026: no idea, could very easily be a re-run of the bubble/crash of 2020/2021/2022 financial year reporting. or could be steady growth.
long-term: every company in the world with any capability to make tensor chips will be rushing to make them currently, and the hype that is boosting nvidia today may be their doom in 5-10 years time as something new and hotter comes along.
As NVIDIA replaced Cisco/Intel as the key datacenter spend, another even more AI/tensor-calculation specialised company may come along to replace NVIDIA in turn. Or we may see ‘back to the cloud’ with better GPU cloud offerings in the cloud.
