GoKawiilNvidia CEO Jensen Huang was years ahead of the market when he pushed the company to start tinkering with building AI-specific chips back in 2010, more than a decade before the current buzz around AI. A similar move in 2020 — doubling down on data center networking with a strategic acquisition — has led to one of the company’s most lucrative and quickly growing divisions, but with little fanfare.
In just a few years, Nvidia’s networking business, designed to connect data centers, has grown into the company’s second-largest revenue driver behind compute. Last quarter, it reported $11 billion in revenue, a year-over-year increase of 267%, and brought in more than $31 billion for the full year, according to Nvidia’s most recent earnings.
Driven by growth in AI processing, the division includes tech like NVLink, which powers communication between GPUs on a data center rack; Nvidia InfiniBand Switches, an in-network computing platform; Spectrum-X, the ethernet platform for AI networking; and co-packaged optics switches, among others.
Together, Nvidia’s networking business includes all the tech needed for building an “AI factory,” a data center designed for training AI models.
Kevin Cook, a senior equity strategist at Zacks Investment research, told TechCrunch that Nvidia’s networking business is one of the most impressive new segments from the company. “[Nvidia’s networking business] reports $11 billion for the quarter; that number is greater than Cisco’s networking business, almost as big as the full-year estimates,” Cook said, adding it does in one quarter what Cisco’s business does in a year.
And yet — the business segment doesn’t draw the same attention as the company’s chip business, which is significantly larger. It also doesn’t get as much fanfare as the company’s gaming business, it’s original bread-and-butter business, which is nearly three times smaller.
The origin of Nvidia’s networking business comes from Mellanox, a networking company founded in Israel in 1999 that Nvidia acquired in 2020 for $7 billion.
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