---
title: "The Dawn of AI : Pricing Power \u0026 Profits in NVidia's Business"
description: "Explore how NVIDIA's AI dominance drives 88% quarterly revenue growth and 141% data center surge, with key metrics on pricing power and market demand."
categories: ["trends","AI","data analysis"]
keywords: ["NVIDIA","AI pricing power","data center revenue","GPU market growth","Tomasz Tunguz","technology trends","venture capital","SaaS profitability","data analysis","NVIDIA earnings report"]
ai_summary: "NVIDIA's AI-driven growth showcases 88% revenue increase and 141% surge in data center sales, highlighting pricing power."
date: 2023-08-23
lastmod: 2026-07-31
canonical_url: https://www.tomtunguz.com/early-days-ai/
author: "Tomasz Tunguz"
---

If we needed another exclamation point on the tremendous growth opportunity, NVidia's earnings punctuated the euphoria with gusto.

![image](https://res.cloudinary.com/dzawgnnlr/image/upload/iwlgbaxgmumhwpwvvjlc.png)

Revenue grew 88% in a quarter, nearly doubling. The company had projected $11b & exceeded projections by $2.5b or 26%. 

The Data Center business, which sells to clouds & consumer companies drove nearly all of the growth, surging 141% quarter-over-quarter to $10.3b & nearly 3x annually.

![image](https://res.cloudinary.com/dzawgnnlr/image/upload/nog1j5d0p0e9owmvhfha.png)

NVDA's profitability is remarkable. Over the last year, the company's operating costs haven't increased more than 15% yet, net income (profit) has quadrupled. The company's pricing power at work : limited supply & increased demand pushes prices higher. 

China demand remained within the historical range of 20%-25% of Data Center revenue, implying the export regulations imposed on chips doesn't seem to have impacted the company. 

Looking at some of the inventory metrics (this isn't a software company!), inventory is relatively flat, but DSI (Days Sales Inventory - the number of days required to sell all existing inventory) has fallen 41% ; another sign of unmet demand.

Long term supply obligations (pre-purchasing of materials/inventory) has increased 53%, another sign of customers yelling for more GPUs. Accounts receivable - which is the amount customers owe NVidia for purchased goods but yet haven't paid - increased more than 70%.

 Metric | Q1  | Q2 | 
| ----- | ---: | ---: | 
| Inventory, $b | 4.6 |  4.3   | 
| DSI | 165 |  97     | 
| Long term supply obligations, $b | 7.3  | 11.2 | 
| Accounts receivable, $b | 4.1 | 7.1 | 


Jensen Huang, the company's CEO, estimated worldwide data centers are worth $1t with $250b spent on new chips each year. At the current run rate, that implies NVidia is capturing about 22% of that market. 

AI has become the engine pushing the technology markets forward - both at the infrastructure & software levels.