Research and development (R&D) expenses are one of the highest quality indicators of future revenue growth. Considering NVIDIA's revenue forecast for the coming quarters, it's no surprise that it's definitely ahead of its peers, including AMD, in terms of R&D expense metrics.
NVIDIA recorded $3.090 billion in research and development expenses in the quarter ended in July. Annualizing this figure, the GPU maker's cumulative (probable) R&D expenses for the previous quarter and the following three quarters are $12.36 billion.
By comparison, AMD recorded $1.593 billion in research and development expenses in its quarter ended in June. Annualizing this figure, the company's cumulative (possible) R&D quota for the previous quarter and the following three quarters is $6.372 billion.
In other words, based on current annualized forecasts, NVIDIA's current R&D investment is 1x that of AMD. This is a sharp reversal from 2013, when both companies spent almost the same amount of money on their respective R&D activities. Since then, however, Nvidia has continued to invest in research and development activities and is currently enjoying the fruits of those investments.
In addition, AMD must allocate R&D resources among its CPU, GPU and FPGA divisions. NVIDIA, by contrast, is devoting more and more of its resources to building AI racks, which will only further solidify the GPU maker's lead in this highly competitive space.
William Blair believes that Nvidia's revenue in fiscal year 2025 will reach $110 billion. You know, the company's revenue in fiscal year 2023 is only US$15 billion!
The NVIDIA GB200 CPU+GPU combination is currently priced between US$60,000 and US$70,000, while a single NVIDIA B100AI accelerator is priced between US$30,000 and US$35,000. What's more, the company's 72-chip AI rack currently costs between $2 million and $3 million.
In a recent interview with Altimeter Capital, NVIDIA CEO Jensen Huang asserted that existing data centers will need approximately $1 trillion worth of GPUs over the next 4 to 5 years to modernize and adapt to the changing demand environment.