- NVDA
- OPAI.PVT
On Nov. 16, 2022, Nvidia (NASDAQ:NVDA) reported results for the <a href="https://bitcomme.com/whitehorse-finance-inc-announces-special-distribution-and-to-report-third-quarter-2026-financial-results/” title=”WhiteHorse Finance, Inc. Announces Special Distribution And To Report Third Quarter 2026 Financial Results”>third quarter of fiscal 2023. It wasn’t a great report. The chip designer missed Wall Street’s average bottom-line target, even.
Revenue fell 17% year over year, and gaming sales were cut in half. New U.S. export rules blocked its top data center chips from China. Management took a $702 million inventory charge for products it no longer expected to sell in the Chinese market. If you skimmed the headlines that evening and went back to your couch, nobody could blame you.
Missed AI’s “Act 1”? Act 2 Could Be 14x Bigger.Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout.Continue »
Two weeks later, OpenAI released ChatGPT, and the tech world went bananas. Nvidia was already shipping chips to support the generative AI wonder. The stock was worth roughly $390 billion back then, and $5.5 trillion in October 2026. Things have changed, and November 2022 was a turning point.
So I went back and checked out that ho-hum earnings call. Hindsight is cheating, I know. It’s also a pretty good way to learn what an early signal might look like before it becomes obvious.
Nvidia CEO Jensen Huang. Image
The ghost in the gaming numbers
Nvidia still had a gamer’s reputation. The pandemic graphics card frenzy, further juiced by crypto miners, had ended with a whimper. Its ghost was haunting the sales channel in the form of unsold inventory and secondhand cards on eBay. When an analyst asked about leftover mining hardware, CEO Jensen Huang said he didn’t expect blockchain to be an important part of the business anymore.
In 2022, it sounded like Huang dodging an uncomfortable question in the middle of a crypto winter. He was absolutely right, though. Ethereum switched from GPU-based mining to a proof-of-stake system in September that year, and specialized processors were already orders of magnitude better for mining Bitcoin. Even if the AI boom hadn’t been around the corner, the crypto-mining surge was over.
Meanwhile, in the other corner of the income statement, data center revenue rose 31% to a record $3.8 billion. Gaming fell 51% to $1.6 billion. Just one year earlier, gaming had been the bigger segment. By this quarter, data center was about 2.4 times its size and made up nearly two-thirds of total revenue.
The new pillar of the business had been poured and set while most of the attention stayed on the gaming wreckage.
