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Research and development (R&D) expenses are one of the highest quality markers of future revenue growth. Given NVIDIA's heightened revenue projections for the upcoming quarters, it is hardly a surprise that it is now absolutely dominating its peers, including AMD, when it comes to the R&D metric.
$NVDA is widening the R&D gap with its closest competitor. Annualizing last quarter's R&D spend, NVDA is investing now almost at twice the level of $AMD. And the latter will have to split R&D between GPUs, CPUs and FPGAs, whereas NVDA can fully focus on building out the AI stack. pic.twitter.com/nL4BpTPNeU
— Tech Fund (@techfund1) October 14, 2024
To wit, NVIDIA recorded $3.090 billion in R&D expenses for its July-ending quarter. Annualizing this figure yields $12.36 billion as the GPU manufacturer's cumulative (probable) R&D metric for the previous 1 quarter and the next 3 quarters.
In contrast, AMD recorded $1.593 billion in R&D expenses for its June-ending quarter. Annualizing this figure yields $6.372 billion as the the company's cumulative (probable) R&D metric for the previous 1 quarter and the next 3 quarters.
In other words, NVIDIA is now investing ~2x AMD's R&D expenses, based on the current annualized projections. This marks a significant deviation of pace from back in 2013, when both companies were investing almost identical amounts in their respective R&D activities. Since then, however, NVIDIA has continued to invest a higher amount into its R&D activities, and is now enjoying the fruits of those investments.
What's more, AMD has to divide its R&D resources between its CPU, GPU, and FPGA segments. In contrast, NVIDIA is increasingly directing its resources towards building out AI racks, which only furthers the GPU manufacturer's lead in this highly competitive segment.
For the benefit of those who might not be aware, William Blair now sees NVIDIA's FY 2025 revenue at a whopping $110 billion. To put this figure into context, the company's FY 2023 revenue was just $15 billion!
Bear in mind that NVIDIA's GB200 CPU+GPU combo is currently priced between $60,000 and $70,000, while a single NVIDIA B100 AI accelerator costs between $30,000 and $35,000. What's more, the company's 72-chip AI rack is now priced at between $2 million and $3 million.
$NVDA CEO: "We’re not trying to take any share from anybody. NVIDIA is a market maker, not a share taker. If you look at our company slides, not one day does this company talk about market share. All we’re talking about is how do we create the next thing? What’s the next problem… https://t.co/eya7xp7WSm
— The Transcript (@TheTranscript_) October 13, 2024
In a recent interview with Altimeter Capital, NVIDIA's CEO Jensen Huang asserted that existing data centers will need around $1 trillion dollar worth of GPUs in the next 4 to 5 years to modernize and remain abreast with the evolving demand environment.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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