Chip manufacturing behemoth Nvidia reported record second-quarter revenue on growing demand for its data centers, hardware and AI models. 

“Data center revenue of $26.3 billion was a record, up 16% sequentially and up 154% year-on-year,” Chief Financial Officer Colette Kress said in the company’s earnings release on Aug. 28. 

Nvidia attributed its data center growth to: 

• Generative AI; 

• Model training; and 

• Inferencing or training models for specific use cases on specified data sets. 

The Santa Clara, Calif.-based company aims to create more AI factories and data centers that are built with Nvidia hardware and software to provide its customers with better AI capabilities, Kress said. 

THE BIG PICTURE: Nvidia competitors, including AMD and Super Micro Computers, are also seeing increased demand in the financial services sector for their AI chips and software. 

“We closed multiple large wins in the quarter with financial services, technology, health care, retail, manufacturing and transportation customers,” AMD Chief Executive Lisa Su said during the company’s earnings call on July 30. 

Nvidia is seeing increased traction from financial institutions for its NIM services or microservices, which can help automate and improve the efficiency of specific tasks using AI, Kress said. 

NIMs are open source models delivered through APIs that organizations can quickly plug into their infrastructure, deploying AI to improve efficiencies, Malcolm deMayo, global vice president of financial services at the chip-making giant, previously told Bank Automation News, adding that these models are customizable according to the customer’s needs. 

“For most financial services firms the largest workload is data processing, and they spend more money on data processing, and computing any other workload,” deMayo said. Nvidia’s NIMs and AI factories help enable faster data processing, he said. 

BY THE NUMBERS: In Q2, Nvidia reported: 

• Revenue of $30 billion, up 122% YoY; 

• Net income of $16.6 billion, up 168% YoY; and 

• Research and development costs of $3.1 billion, up 50% YoY. 

WHAT THEY ARE SAYING: Despite posting record revenue, Nvidia fell short of Wall Street analysts’ expectations. 

However, a 12% quarter-over-quarter increase in revenue from China was encouraging to some investors, and Nvidia is well poised to take advantage of the growth in generative AI as more companies deploy the tech, according to an Aug. 28 Bank of America Securities report. 

“Our data center revenue in China grew sequentially in Q2 and is a significant contributor to our data center revenue,” Kress said. 

OF NOTE: Nvidia continues to ink major deals with big financial services companies, including PayPal, American Express and BNY, according to the company’s website. 

Nvidia teamed up with U.K.-based neobank bunq in Q2 to fight financial fraud using generative AI, according to a June 3 Nvidia release.   

MARKET REACTION: Nvidia’s share prices dipped as much as 5% in after-hours trading on Aug. 28 after the results were announced. Today, shares were down 5.6% to $118.52 at market close. 

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