Chips

On 24 May 2023 Nvidia told investors to expect about $11 billion of revenue for the quarter to July 2023. The figure was about 50% above analysts' expectations. Six months earlier the company had been in a downturn. Gaming sales had fallen after the crypto and pandemic boom, it had written down inventory, its market value was roughly $300–350 billion (October 2022, market data, verify), and the United States had just barred its best data-centre chips from China. Then ChatGPT launched on 30 November 2022, and every large technology company decided at once that it needed clusters of Nvidia's new H100 to train and serve models of its own. Nvidia reported $13.5 billion for the quarter, more than its own guidance, and on 30 May 2023 its market value passed $1 trillion.

What followed was the fastest growth on record for a company of Nvidia's size. Revenue went from about $27.0 billion in fiscal 2023 (the year to January 2023) to about $60.9 billion, $130.5 billion and $215.9 billion in the next three fiscal years, with data centres providing about $193.7 billion of the last figure (company). In the quarter to July 2026 Nvidia alone reported about $96.2 billion of revenue at a 75.0% gross margin (company 8-K, August 2026). It became the first company worth $4 trillion on 9 July 2025 (intraday; its first close above that level came on 10 July) and the first worth $5 trillion on 29 October 2025, and its market value was reported at about $5.7–5.8 trillion in early October 2026.

A hardware company with software margins is unusual, and this chapter explains how it happened, who else in the chip chain earns the excess, and what is trying to take it away.