Nvidia CEO Jensen Huang said the company’s Omniverse suite of software presents “one of the largest graphics opportunities” for the chipmaker yet as he expects virtual 3-D worlds will represent the next stage of the internet and drive greater demand for the company’s GPUs.
“Instead of just querying information, we would query and interact with people and avatars and things and places, and all of these things are in 3-D, so hopefully one of these days — we’ll try to realise it as fast as we can — every transaction that goes into the internet touches a GPU,” Huang said during the Wednesday earnings call for the third quarter of Nvidia’s 2022 fiscal year. “Today, that’s a very small percentage, but hopefully, one of these days will be a very, very high percentage.”
Huang made the remarks as the chipmaker reported record revenues in the third quarter for the entire company as well as its gaming, data centre and professional visualisation segments. This brought Nvidia’s third-quarter revenue to US$7.1 billion, a 50 percent year-over-year increase and nearly US$300 million higher than the average analyst estimate.
Nvidia’s strong quarter was also represented in its net earnings of $1.17 per share, 60 percent higher than the same period last year, beating Wall Street’s expectations. The company expects fourth-quarter revenue to reach roughly US$7.4 billion, which would mark a roughly 48 percent year-over-year increase.
Nvidia’s stock price was up more than 5 percent in after-hours trading Wednesday.
Huang’s comments about Omniverse were made after Nvidia officially launched the enterprise version of the software suite at last week’s fall GTC 2021 conference, giving companies a collaboration platform that allows 3-D design teams to work together on the same files in real-time across multiple software suites on any device. The company also announced expansions of Omniverse with Omniverse Avatar, a 3-D virtual agent builder, and the use of Omniverse for digital twin use cases.
In the third-quarter earnings call, Huang broke down how Omniverse could become a big software business company and drive more GPU sales across workstations and servers. On the software side, this will be driven by the subscription license model of Omniverse Enterprise, which consists of multiple elements to serve end-users and support back-end infrastructure. This includes the Omniverse Nucleus server software, which costs US$1,000 per named user annually.
“The main user could be one of the 20 million creatives or 20 million designers — the 40 million creatives and designers around the world,” Huang said. “When they share Omniverse, each one of the main users will be $1,000 per user per year.”
Omniverse Avatar, on the other hand, presents other markets including automotive, Huang said, because he imagines 3-D virtual agents becoming commonplace in cars in the future. There are also many more opportunities in retail stores and warehouses, he added.
“There are 100 million cars, and these 100 million cars will all have the capability to have something like an Omniverse Avatar, and so those 100 million cars could be $1,000 per car per year,” he said.
These new software opportunities, in turn, will increase demand for Nvidia’s GPUs across workstations and servers, where the underpinnings of Omniverse’s software runs.
“My guess would be that the hardware part of it is probably going to be about half and then the licensing part of it would probably about half, over time,” Huang said of Omniverse. “But this is really going to be one of the largest graphics opportunities that we’ve ever seen.”
Nvidia’s gaming revenue grew 42 percent year-over-year to US$3.2 billion, which CFO Colette Kress said was driven by strong demand “across the board.” That included a big boost in sales for the company’s high-end RTX GPUs for laptops as part of the company’s “biggest effort refresh cycle with gamers” and an ever-expanding base of content creators, Kress added.
While Nvidia didn’t have visibility into how much cryptocurrency mining impacted overall demand for GPUs, nearly all of the company’s Ampere architecture desktop GPUs were “light hash rate to help steer GeForce supply to gamers,” according to Kress. The company’s purpose-built Crypto Mining Processors brought in $105 million, which accounted for a little less than half of Nvidia’s OEM business segment.
The chipmaker’s data centre revenue grew even faster with a 55 percent increase over the same period last year, which resulted in $2.9 billion in third-quarter sales. Kress said Nvidia saw record revenues from both hyperscalers and customers in vertical industries, with the former rapidly adopting Ampere architecture GPUs for internal and external workloads.
Nvidia’s professional visualisation revenue grew the fastest with a whopping 144 percent year-over-year increase, which brought third-quarter sales to US$577 million. Kress said this was driven by strong demand for sales of mobile and desktop workstations as “enterprise deployed systems to support hybrid work environments.” That activity was led by customers in media and entertainment, health care, public sector and automotive verticals.