Nvidia is still making billions in Q4 2023 despite a giant drop in PC demand

Nvidia just reported its fourth quarter and full-year earnings, and it’s not exactly rosy — at least compared to pandemic highs. Last year, Nvidia had record quarterly revenue of $7.64 billion, including $3 billion in pure profit. For Q4 of its fiscal 2023, the company forecast that it would see just $6 billion in quarterly revenue in today’s earnings results, and that’s just about where it landed: $6.05 billion in revenue, down 21 percent, of which $1.4 billion was profit, down 53 percent. For the full year, it raked in $26.92 billion, almost identical to last year, though profit was down 55 percent.

Remember: in 2021, $5 billion in revenue a quarter was a new Nvidia record. Now it’s the status quo: the company says it’s expecting to see $6.5 billion next quarter, too.

Nvidia’s data center and automotive businesses were actually up this quarter, with record revenue for automotive of $294 million; the dip was largely in Nvidia’s graphics business, particularly gaming, which were each down 46 percent. That gaming decline includes “lower shipments of SOCs for game consoles,” which is code for “Nintendo isn’t selling as many Switches anymore” — it’s the only game console that uses an Nvidia chip.

Like other chipmakers, Nvidia is shipping fewer GPUs to retailers and partners instead of slashing prices. The polite phrase is “lower sell-in to partners to help align channel inventory levels with current demand expectations.” Nvidia also blamed disruptions in China due to covid and other issues.

We’re waiting to see if Nvidia’s CEO Jensen Huang is optimistic that Nvidia might see a similar recovery — so far, he’s simply stated that gaming is recovering. He spent most of the call hyping up Nvidia’s potential for data center growth — because of the rise of large language models (LLMs) used to train AI systems like ChatGPT and Bing, which often run on GPU hardware from Nvidia.

He also talked up Nvidia’s work with Mercedes-Benz on “software-defined vehicles,” something many other automakers and tech companies are also pursuing, saying: “You can just imagine what it looks like if the entire Mercedes fleet on the roads today were programmable, you could OTA… the whole fleet of Mercedes would represent revenue generating opportunity.” It’s not clear whether every customer wants a software-updatable car, though: read our stories on how the future of cars is a subscription nightmare, Volkswagen’s buggy software, and a software update we wrote about literally today that temporarily turned one of the highest-rated EVs into a turtle.

Developing… we’ll add more to this story if there are interesting answers on the call.