Nvidia is an AI company now, with GeForce taking a backseat

As its data center revenue grows exponentially, don't be surprised if Nvidia GeForce graphics cards become less of a priority for Nvidia.

An Nvidia Omniverse avatar of the company's CEO, Jensen Huang

In the wake of its Q3 FY24 financial results, it’s clear that Nvidia is no longer a business that is near-equally split across data center and gaming markets. Instead, it is now firmly a company that primarily deals in the AI and data center business, with its GeForce graphics cards and technologies serving as a much smaller, secondary source of income.

This isn’t entirely unexpected, with Nvidia breaking its own data center revenue records for the past three quarters. While the launch of new GeForce graphics cards has seen an uptick in gaming revenue, it’s not bringing in nearly as much cash.

For context, Nvidia’s data center division just brought in $14.51 billion, a staggering 279% increase, year-on-year (YoY). By comparison, its gaming revenue was just $2.86 billion, up 81% YoY. That’s a difference greater than 600% between the two revenue streams. You can read the full details and balance sheet here.

While it’s impossible to say for sure whether this level of revenue can be maintained, it’s clear that Nvidia doesn’t see interest in artificial intelligence (AI) waning any time soon. Just a week before these financial results, the company’s CEO Jensen Huang said: “We’re now seeing a major second wave.”

This seismic shift in the company’s financial interests has some potential knock-on effects for future GeForce graphics cards. Taking a more optimistic view, the company’s growing AI expertise should continue to trickle down to its gaming silicon and technologies. We’ve already seen this bear fruit with features like Nvidia DLSS Super Resolution, Frame Generation, and, more recently, Ray Reconstruction.

However, there are potential downsides too. We’re already hearing rumors that the GeForce RTX 5000 series will use GB200 GPUs rather than GB100 stock, with the latter presumably being allocated to data center graphics cards. To be clear, the pixel pushers should still be very performant, but it’s not the crème de la crème we’re used to with the likes of the GeForce RTX 4090 and its predecessors.

Then there’s the competition factor to consider. Looking at the Steam Hardware Survey, it’s clear that gamers continue to prefer GeForce graphics cards to Radeon and Arc alternatives. With extra AI horsepower at its disposal and a lack of compelling competition, Nvidia’s lead shows no signs of narrowing. The company has little reason to suspect it won’t maintain its position even with reduced focus on graphics hardware, which may stifle innovation.

It won’t be long before we can discern whether this is a flash in the pan, similar to Nvidia’s record-breaking revenues during the Coronavirus pandemic and cryptocurrency boom. In the immediate, however, Nvidia is an AI company now, with GeForce taking a backseat.

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