Nvidia mostly serves those in the graphics processing unit (GPUs) market. These are processors with high performance which produce authentic and immersive graphics for notebooks and computers. Designers and gamers favor the discrete GPUs Nvidia offers for their high 3D and 2D graphics performance.
The company records its earnings through two segments, GPUs and Tegra Processors. GPU revenues are generated from the sales of graphics processors used primarily in professional PCs, consumer PCs, and data centers. Tegra Processors represent the revenue from products that are based upon Tegra SOC as well as modem processor technology, which includes Tegra for cars, including navigation and infotainment systems, as well as gaming devices.
Nvidia's Business Segments
Nvidia changed how it announced its operating segments in the first quarter of FY 2021. The two primary segments reportable include compute and graphics and networking. Nvidia has also included an additional expense category that is not part of the other two segments.
The breakdowns of operating and revenue are provided for these segments. Be aware that the consolidated operating income used to determine the data shown on the chart below and above does not include the operating loss in the other category in the Q3 of FY 2022. The company previously offered income figures for the GPU segment and the Tegra processor section.
Graphics
The graphics division of Nvidia includes GeForce GPUs for PCs and gaming, the GeForce streaming service for games and associated infrastructure, and games platforms. The segment also includes Quadro/NVIDIA RTX GPUs for design in the enterprise and cloud-based GRID software that allows virtual and visual computing and automotive infotainment platforms for systems. In the third quarter of FY 2022, the graphics division generated $4.1 billion, or around 58% of the company's total revenues. This was an increase of 46.8 percent compared to the prior quarter. The segment's operating income increased 60.6 percent year-over-year to $2.2 billion, accounting for approximately 62 percent of the entire.
Networking and Computing
The network and compute segment comprises the Nvidia Data Center platforms and systems that support AI high-performance computing and the acceleration of computing. It also includes interconnected and networking solutions, automobile AI Cockpit, autonomous driving development agreements, autonomous vehicle solutions, cryptocurrency mining processors, Jetson for robotics, and additional embedded systems.
The segment of networking and computing generated revenues that were $3.0 billion in the third quarter of FY 2022, an increase of 55.3 percent over the year-before quarter. This segment is responsible for around 42% of Nvidia's overall revenue. Operating income increased 80.5 percent YOY to $1.3 billion. Computing and networking account for 38 percent of the company's operating profit.
All Other
In the above paragraph, all other category comprises expenses that aren't included in the two other segments. This includes stock-based compensation along with the corporate infrastructure, support expenses, acquisition-related expenses, IP-related costs, and other charges and benefits that aren't recurring but considered to be of a business nature. These costs amounted to the operating losses of 821 million in the Q3 of FY 2022. That's 19.9 percent more than the operating losses reported in the prior year's quarter. The category that was all other didn't generate any revenue in the period.
What's The Next Step For Nvidia?
Nvidia's latest, more advanced chips that can speed up AI processes are likely to remain utilized by data centers and PC manufacturers in a coming couple of years and lead to more intelligent, responsive laptops. They will also help speed the cloud network as well as data gathering. Nvidia investors may expect it to become a crucial company in the increasingly digital world that we live in.
The role of Nvidia in AI is well-known, as evidenced by its partnership with the car maker Mercedes-Benz in the past year. Investors flock to Nvidia to hope it will soon begin selling its chips to companies that make autonomous cars, while the business hasn't been able to take off yet.
Who Pays To Nvidia?
Notebook and PC OEM manufacturers like Dell, HP, Toshiba, and Sony make payments to Nvidia's GPUs. The company also sells its top-of-the-line GPUs directly to customers through retailers like Best Buy. The company also operates a data center division, including Tesla, for AI, which utilizes deep learning and accelerated computing. Gaming device manufacturers like Nintendo utilize Nvidia's SOC module to power their Switch console and pay Nvidia.
