Is Nvidia Poised to Be the Next AWS? Uncovering Possibilities.

Nvidia and Amazon Web Services, the profitable cloud division of Amazon, share quite a bit in common. Interestingly, their primary businesses surfaced from lucky circumstances. In AWS’s case, it discovered that it could sell the in-house services like storage, compute and memory it had developed for itself. For Nvidia, it occurred when they realized that the GPU, originally made for gaming, was also adept at handling AI workloads.
This realization led to a substantial increase in revenue over the recent quarters. Nvidia’s revenue grew exponentially, moving from $7.1 billion in Q1 2024 to $22.1 billion in Q4 2024. This exceptional trajectory predominantly came from the company’s data center business.
While Amazon didn’t hit such intense growth levels, it has been a consistent revenue generator for the e-commerce giant. Both companies benefitted from being early to the market. Over time, Microsoft and Google entered the fray, establishing the Big Three cloud vendors. It’s anticipated that other chip makers will gradually start to occupy a significant market share, even as the revenue continues to increase over the next few years.
Both companies found themselves in the right place at the right time. Around 2010, as web and mobile apps started to emerge, the cloud presented on-demand resources. Enterprises soon acknowledged the value of migrating workloads or creating applications in the cloud instead of managing their own data centers. Similarly, with the rise of AI over the past decade, and more recently large language models, there has been a significant increase in the use of GPUs to process these workloads.
Over the years, AWS has expanded into a tremendously profitable business, with a run rate close to $100 billion and would still be hugely successful if detached from Amazon. However, while AWS growth is slowing down, Nvidia’s seems to be on the rise. This is partially attributable to the law of large numbers, which will eventually impact Nvidia as well.
The crucial question for Nvidia is whether it can maintain its growth and become a consistent revenue powerhouse like AWS for Amazon. If the GPU industry starts to harden, Nvidia does have alternatives, but as illustrated by this chart, these alternative avenues are substantially smaller revenue sources that are growing at a markedly slower pace than the GPU data center industry is currently witnessing.
Nvidia’s revenue growth, as the chart above indicates, has been skyrocketing in recent quarters. Both Nvidia and Wall Street analysts predict it will continue.
Nvidia, in a recent earnings announcement, communicated to their investors that they foresee a revenue of $24 billion in the forthcoming quarter (Q1 FY25). From their quarter-ago records, Nvidia is projecting a projected growth of approximately 234%.
Although such a figure is unexpected from mature corporations, Nvidia’s rapid revenue growth is anticipated to slow. The company predicts a moderate 8.6% growth rate from their final fiscal 2024 quarter to their initial fiscal 2025 quarter, a decline from the 22% revenue gain from the third to the fourth quarter of the recently completed fiscal year. Undeniably, Nvidia’s year-over-year growth rate remains impressive, despite the upcoming decreases.
Furthermore, in the current fiscal year, analysts predict Nvidia will produce a revenue amounting to $110.5 billion, slightly over an 81% increase compared to their past year’s results. Nonetheless, this is significantly lower than the 126% gain they reported in the recently ended fiscal 2024.
Yet, the pressing question remains – does this matter? It is predicted that in the coming quarters, Nvidia will persist in exceeding its revenue past the $100 billion annual run rate, an noteworthy feat for a company who recorded a total revenue of merely $7.19 billion in the equivalent period the previous year.
Analysts and, to a lesser extent, Nvidia, foresee substantial potential for the company’s growth, even if this year’s stunning revenue increase begins to moderate. The future, particularly over a somewhat longer period, remains uncertain.
Artificial Intelligence (AI) could potentially provide consistent growth for Nvidia over the next few years, despite rising competition from AMD, Intel, and other chip manufacturers. Like AWS, Nvidia may face intensified competition in the future, but its current market dominance allows it to yield some.
If we examine solely at the level of the chip, disregarding boards and other related aspects, it’s clear that Nvidia maintains a strong position:
Image Credits: IDC
If you look at the board level with these market share numbers from Jon Peddie Research (JPR), a firm that tracks the GPU market, while Nvidia still dominates, AMD is coming on stronger:
Image Credits: Jon Peddie Research
C Robert Dow, an analyst at JPR, says some of these fluctuations have to do with when new products are introduced. “AMD gains percentage points here and there depending on cycles in the market — when new cards are introduced — and inventory levels, but Nvidia has been in a dominant position for years, and that will continue,” Dow told TechCrunch.
Shane Rau, an IDC analyst who follows the silicon market, also expects the dominance to continue, even as trends shift and change. “There are trends and countertrends, the markets in which Nvidia participates are big and getting bigger, and growth will continue, at least for another five years,” Rau said.
Nvidia isn’t just selling chips. They’re also marketing boards, systems, software, services, and time on their supercomputers. All of these markets are significant and growing, Nvidia is positioned to benefit from them,
However, not all are confident in Nvidia’s unassailable status. David Linthicum, a veteran cloud consultant, and author expresses doubt about blanket GPU requirements. He says, “Many claim they require GPUs. Yet, when I examine the situation and do some ad-hoc math, I find that CPUs are entirely adequate.”
As this realization permeates, Linthicum believes Nvidia’s pace will decrease and its market grip will weaken. “I believe we’ll see Nvidia transform into a less formidable player over the coming years. This shift will occur because there’s a proliferation of alternative solutions being developed.”
Rau suspects other vendors will also gain as businesses broaden AI applications with Nvidia’s suite. “I predict burgeoning markets in the future that will boost Nvidia. However, other companies that embrace these windfalls will also benefit from AI.”
It could be that a disruptive element might emerge, which could be beneficial, preventing one corporation from becoming too powerful. “Ideally, you’d want disruption to occur, as this is how markets and capitalism function most effectively. An early bird gets the lead, other providers follow suit, and the market expands. Then come the established players who are eventually overtaken by a superior method within their own market or adjacent markets infiltrating theirs,” says Rau.
In fact, this is starting to become evident at Amazon as Microsoft is making headway with its collaboration with OpenAI and Amazon is compelled to keep up in the realm of AI. Regardless of what happens to Nvidia in the long run, it’s currently in a commanding position, accumulating wealth, reigning over a burgeoning market, and having almost everything tilt in its favor. This isn’t to suggest that this will always be the case or that increased competition isn’t on the horizon.
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