Market trends indicated by concerns over Nvidia's GPU supply shortage and the timing of the next-generation models.

November 22, 2024

Nvidia's recent earnings reports showed record results with revenue increasing by 94% year-on-year to 35 billion dollars and net profit increasing by 109% to 19.3 billion dollars. At the same time, there were warnings of a possible shortage of gaming GPUs during the holiday season. This is believed to be due to the concentration of demand for AI and datacenter products, as well as production adjustments for the RTX 40 series in preparation for the RTX 50 series.
The supply shortage of the RTX 40 series, especially in the high-end models, raises concerns about price increases, making consumer market trends a focus of attention. The announcement of the next generation GPU is predicted to take place at CES 2025, potentially becoming key to Nvidia's new global strategy.

In Nvidia's recent revenue announcement, the datacenter business accounted for 87.7% of the company's total revenue, recording 30.7 billion dollars. This includes the success of high-performance AI products such as H100/H200 and Blackwell B100/B200. On the other hand, revenue from the gaming division only reached 3.2 billion dollars, a 15% increase year-on-year, with a relatively diminished presence in the overall revenue composition. The consumer GPU market, while not reaching the profit margin of the AI and datacenter divisions, remains a crucial pillar supporting Nvidia's brand recognition.
The changing revenue structure is directly linked to the rapid expansion of AI demand. With emerging AI and cloud-based data analytics making strides in various fields, Nvidia's strategy is seen to be shifting towards a focus on the AI market. While this move is expected to boost revenue expansion in the short term, the long-term impact of the gaming market supply shortage on brand image and user experience cannot be ignored. Balancing the expansion of the datacenter business with consumer-focused operations will be a critical challenge going forward.

Nvidia's CFO, Colette Kress, warned of a gaming GPU supply shortage, which is intertwined by several complex factors. The main reasons include production adjustments for the RTX 40 series and preparations for the next-generation RTX 50 series, but the reallocation of production resources due to focus on the AI market cannot be overlooked. Furthermore, shortages have already emerged for higher-end models like the RTX 4090, with reports of price increases becoming more frequent.
If this supply constraint continues into the holiday season, consumers' choices will be limited. Particularly, if prices rise, purchases, especially of high-end products, may be postponed. While this may bring short-term benefits to Nvidia, it also carries the risk of consumer trust loss and transition to competing products. It is necessary to monitor whether the supply shortage remains a temporary phenomenon or if it will cause distortions in the market in the medium to long term.

There is speculation that the announcement of the RTX 50 series, adopting the next-generation Blackwell architecture, will take place at CES. In particular, high-end models like the RTX 5090 and RTX 5080 have garnered attention, with industry insiders keen on what performance these models will offer. It is seen as part of Nvidia's strategy to further strengthen the image of high-performance GPUs they have built up so far.
However, there is a high likelihood that initial shipments may become bottlenecked. While chip shipments to AIB manufacturers are anticipated, it remains unclear whether they can meet demand in the consumer market. The market will be closely watching how price adjustments between the new series and the RTX 40 series will be handled. Whether Nvidia can offer compelling proposals to users seeking high performance will likely determine their future success.

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