Nvidia Data Center Dominates Amid AI Boom
Over $22.6 billion of Nvidia Corp.’s $26 billion in total revenue came from data center sales, setting a record for the artificial intelligence (AI) chip manufacturer.
“The next industrial revolution has begun — companies and countries are partnering with Nvidia to shift the traditional data centers to accelerated computing and build a new type of data center — AI factories — to produce a new commodity: artificial intelligence,” Jensen Huang, founder, and CEO of Nvidia, said.
“AI will bring significant productivity gains to nearly every industry and help companies be more cost- and energy-efficient while expanding revenue opportunities.”
Nvidia leads in AI revenue.
Revenue at Nvidia rose by 262% over the previous year and 18% from the fourth quarter of last year. According to Huang, the “strong and accelerating demand” for the company’s Hopper platform drove a 427% year-over-year growth in the data center segment.
Nvidia introduced its next-generation Blackwell platform in March, and it anticipates that the new chips will boost sales even more in the upcoming quarter.
The market for data centers as a whole is still growing. According to accounting firm PwC, the number of jobs related to data centers grew by 20% in the United States between 2017 and 2021, from 2.9 million to 3.5 million, exceeding the 2% increase in employment in the country. An additional 7.4 ancillary jobs are generated for every direct data center job.
The public and businesses embrace AI, so vacancy rates are at all-time lows of about 3%. Even without artificial intelligence, a massive amount of data is created every minute—roughly 200 million emails and 350,000 posts to X. Globally, more than 100,000 hours are spent on Zoom calls every minute.
Talks on increasing profitability
According to Carrington Brown, senior managing director of development at Affinius Capital, “this level of activity necessitates a substantial supportive infrastructure,” she told NAIOP.
Institutional investors also participate in increasing their profitability. Pat Lynch, managing director of CBRE’s Data Center Solutions group, states that private equity-backed businesses like Carlyle, KKR, Macquarie, BlackRock, and Blackstone trail behind Equinix and Digital Realty as industry leaders.
Private equity firms were involved in about 90% of data center transactions in the first half 2022. According to McKinsey & Co., the data center market will expand from 17 gigawatts (GW) in 2022 to approximately 35 GW by 2030. Megawatts are used to measure data centers instead of square feet.
According to JLL Executive Vice President Curt Holcomb, “We are in the most significant data center development boom in the industry’s history,” he told NAIOP. Year after year, the industry has consistently experienced double-digit compound annual growth rates. A mismatch between supply and demand brought on by COVID-19-related delays in data center construction over several months is partially to blame for this growth. AI’s introduction has only strengthened the strong demand that already existed.
Therefore, despite limitations on the power delivery side, we anticipate that this boom will continue over the next two to three years.”
Dell’s stock triples in a year due to AI boom
Over the past year or so, the rise in artificial intelligence (AI) has helped many companies’ stock prices, Dell Technologies included. In the last year, investors have bought Dell stock in large quantities, believing that the company could reap significant benefits from the increasing use of artificial intelligence. As a result, Dell’s shares have more than tripled.
In its fourth-quarter fiscal 2024 results (for the three months ended February 2), Dell) management noted that the company is seeing strong demand for its AI-optimized servers. Specifically, orders for Dell’s AI-focused servers increased by 40% quarter-over-quarter. Dell’s order backlog for AI servers nearly doubled to $2.9 billion from the previous quarter.
In the fourth quarter of its fiscal year, the company shipped $800 million worth of AI servers, and given its strong backlog, this amount may continue to rise in the upcoming quarters. More importantly, market research firm IDC projects that the AI server market will bring in $33 billion by 2024, meaning that Dell is just beginning to explore a considerable growth opportunity.
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