Nvidia CEO reports that industrial data center sales growth exceeded hyperscaler-focused data center revenue growth.

Nvidia achieved a significant milestone in the fourth quarter of its 2021 fiscal year when data center GPU sales through OEMs to vertical industries grew faster than revenue from hyperscalers for the first time in the company's history. CEO Jensen Huang characterized this shift as the "industrialization of AI," describing it as the industry's "smartphone moment." On Nvidia's earnings call, Huang explained: "All of these industries, whether you're in medical imaging or in lawn mowers, you're going to have data centers that are hosting your products, just like the [cloud service providers], and so that's a brand-new industry." The strongest performing verticals were supercomputing, financial services, higher education and consumer internet, which contributed more than half of overall data center revenue. CFO Colette Kress noted that vertical industries drove more growth for data center compute revenue, which includes the company's latest A100 GPU, than hyperscale customers, as OEMs ramped up their A100-based systems and Nvidia's DGX systems continued to sell well.

Data center compute sales grew 45 percent year-over-year in the fourth quarter, resulting in $1.9 billion in total data center revenue that quarter—a 97 percent increase from the same period last year, though comparable to the previous quarter due to declines in Mellanox networking sales. For the full 2021 fiscal year, Nvidia reported record revenue of $5 billion for the fourth quarter, a 61 percent increase from the same period last year and $180 million higher than Wall Street's expectations, with net earnings of $3.10 per share. The company finished its 2021 fiscal year with $16.7 billion in total revenue, a 53 percent increase from the previous year, and expects revenue for the first quarter of its 2022 fiscal year to reach around $5.30 billion, marking a 72 percent year-over-year increase.

Tim Brooks, managing director at World Wide Technology, a top Nvidia partner and No. 9 on CRN's 2020 Solution Provider 500 list, highlighted the growing demand for Nvidia products among enterprise customers. Brooks reported that his company's Nvidia business grew 400 percent over the past three years and is now in the nine digits. "It's significant enough where we've invested hundreds of people within World Wide — engineers, architects, data scientists and AI solution developers that are all now working for us. Whereas in 2016, when we started, there was basically two of us carrying most of the water." Brooks attributed much of the adoption to customers' desire to transform their business and put data at the forefront of everything they do. "That defines strategy that we then get to go execute on, and AI and machine learning are part of that. And if you're going to have AI and machine learning, you're going to consume GPUs."

While Huang acknowledged that Nvidia continued to be "supply constrained" at the company level with gaming GPUs seeing the most impact, he stated: "For data center so long as the customers work closely with us and we do a good job planning between our companies, there shouldn't be a supply issue." Kress noted that the prior quarter's decline in Mellanox sales was the result of a large, non-recurring sale to a Chinese OEM, and Nvidia expects Mellanox sales to return to sequential growth in the first quarter of fiscal 2022. In segment performance, gaming revenue was $2.5 billion in the fourth quarter, up 67 percent year-over-year and up 10 percent from the previous quarter, while professional visualization revenue was $307 million, down 7 percent year-over-year and up 30 percent sequentially. Automotive revenue was $145 million, down 11 percent year-over-year and up 16 percent from the previous quarter, and OEM and other revenue was $153 million, up 1 percent year-over-year and down 6 percent sequentially.