Is GPU improvement is driven more by gaming then by AI hype? Gaming is the biggest industry and there is real money coming from that. Does speculative money from VCs actually overshadow actual money spent by consumers?
I know stock prices is driven by AI hype but how much does it actually effect the bottom line of Nvidia? I think GPU improvement happens regardless of AI.
Datacenter revenue alone is ~10x of gaming. The datacenter revenue is thought to have literally ~100x the earnings all up (H100 and 4090 have similar transistor counts but the H100 sells for over $30k while the 4090 sells for $2k which indicates huge margins).
Gaming is pretty much insignificant for nvidia. That’s why nvidias stock has 10x’ed recently and their PE looks better now than it did 5 years ago despite that stock increase. They found a new market that dwarfs their old market.
NVIDIA’s net income grew ~580% year-on-year in their 2024 fiscal year. FY2025 is on track for 100%+ growth, essentially 14x in the last 2 years. This is not coming from gaming, “AI hype” is having a huge effect on NVIDIA’s bottom line.
It all depends on whether AI companies can continue to find significant improvements to their models this year. Are transformers reaching their limits? Can researchers find the next level of performance or are we headed for another AI slump?
Interpreting your question about "GPU improvement" from a product perspective, my read is that NVIDIA is of course targeting AI applications and the datacenter. To that end it just focuses on silicon that makes most sense for AI compute, and not so much for gaming.
Of course, the GPUs for the datacenter and for gaming are the same designs, so my read is that in gaming NVIDIA makes up for lack of actual performance for traditional rendering by pushing technologies that can utilize tensor cores like AI upscaling, frame prediction, ray tracing + denoising, etc.., that don't actually contribute to game graphics as much as they could have if they did an architecture tailored to gaming needs instead, with the technologies that they have. It's also sexier in theory to talk about exclusive AI-powered technologies proprietary to NVIDIA than just better performance.
"NVIDIA’s financial report reveals that its data center business revenue in FY2Q25 grew by 154% YoY, outpacing other segments and raising its contribution to total revenue to nearly 88%."
Gaming almost doesn't even register in Nvidias revenue anymore.
But I do think Jensen is smart enough to not drop gaming completely, he knows the AI hype might come and go and competitors might finally scrounge up some working SDKs for the other platforms.
Gaming is effectively irrelevant to nvidia now. The stock appreciation over the last 8 years that brought them from a niche to a global dominant company is all from revenue that first came in from crypto and then got absolutely dwarfed by AI.
ML was big before LLMs and nVidia was already making a killing from selling expensive GPUs that would never draw a single polygon ca 2015. They've been hobbling FP64 (double precision) support in cheaper "consumer" GPUs, to prevent their use in most data centers, for a long time too.
Looking into this a bit, it seems that nVidia was still making most of its money from "gaming" as recently as early 2022. I'd suspect that, if crypto mining could be separated out, the transition point actually happened a couple of years earlier, but nevertheless the datacenter segment didn't become dominant until about 2-2.5 years ago. It existed well before then, but wasn't that big.
I know stock prices is driven by AI hype but how much does it actually effect the bottom line of Nvidia? I think GPU improvement happens regardless of AI.