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Data Centre Demand Spills Over Into Many Areas – Nvidia Continue To Reap Rewards

Analyst Team trader
Updated 27 May 2024

The data centre industry is poised for continued expansion, with projections suggesting that it will grow from 17 gigawatts (GW) in 2022 to an estimated 35 GW by the end of this decade. This growth is measured in megawatts rather than square feet, signalling a shift in how industry expansion is gauged and addressing the significant development boom presently ongoing, partly owing to delays caused by the COVID-19 pandemic and simultaneously driven by a surge in demand.

Data centre employment also reflects this growth dynamic. Within the U.S., jobs cantered around data centre operations have risen by 20% over a four-year span, hitting 3.5 million in 2021 and thus outstripping the overall employment growth rates. The impact of direct data centre employment is further amplified by the creation of approximately 7.4 ancillary jobs for each direct job, highlighting the broader economic implications of the sector's expansion.

Transactions in data centre properties, particularly those involving private equity firms, accounted for roughly 90% of the activity in the first half of 2022. Leading data centre companies like Equinix and Digital Realty maintain their dominance, while private equity-backed entities such as Carlyle, KKR, Macquarie, BlackRock, and Blackstone follow suit in the industry's growth.

Nvidia (NASDAQ:NVDA) is one of those that has been benefitting most from this surge in demand. With the latest earnings delivering a significant financial milestone with its data centre sales surpassing $22.6 billion, securing the majority share of its $26 billion total revenue. An 18% increase from the previous year and a staggering 262% year-over-year growth, Nvidia's financial achievements underscore the company's successful direction and strategic investments in the fast-paced realm of artificial intelligence and data management.


The driver behind this impressive revenue surge is attributed largely to Nvidia's data centre segment, which itself grew by an unprecedented 427% year-over-year. This monumental growth is powered by the company's Hopper platform, which has been met with considerable demand across various industries, emphasising the pivotal role of high-performance computing and AI in today's technology landscape.

Nvidia's record-breaking data centre sales not only underline the company's lead in the AI revolution, but they also reflect a broader industry trend towards significant growth and development within the data centre sector.

With the trajectory showing no signs of slowing, Nvidia and its contemporaries are well-positioned to continue reaping the benefits of this booming market. The spill over into energy, jobs, and related industry is tagged as being a continued driver in the years to come.

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.