Nvidia's $3.3B gaming revenue will drop, but 'not worry' as next year's RTX 50 series will be fine.

Nvidia just announced its Q3 results. In its earnings call, which was expected, there were few mentions of gaming, but a lot of AI talk. Jen-Hsun says explicitly, "We're a data-center-scale AI infrastructure provider". Even though there was little information, it wasn't non-existent. The little we learned about Nvidia's gaming business was promising.

As the company's earnings statement points out, revenue has risen dramatically: "Third quarter Gaming revenue was $3.3 Billion, up 14% over the previous quarter and 15% over a year ago". This is a great number, especially since we're approaching the end of GPU generation.

In the transcript of the earnings call, Nvidia's Chief Financial Officer Colette Krass stated that "despite the strong sell-through in Q3, we anticipate the fourth-quarter revenue will decline sequentially due supply constraints".

When asked about this she clarifies, "Don't worry, I believe we'll be back in the game with more supply once we turn the corner to the new calendar year." We're going to be tight this quarter."

The revenue for gaming is expected to decline in Q4 but don't worry, 2025 will be fine.

We all know what "more supplies" in the new year could mean: shiny, powerful, new Nvidia graphics cards in the 50-series, which may be announced during Nvidia CEO Jen-Hsun Huang’s keynote at CES, in January.

This new generation, which will likely be the best graphics cards available on the market, also explains why Nvidia is expecting lower Q4 revenues: 40-series stocks are drying up to prepare for their replacement stock. We knew this, but we already heard that Nvidia had stopped production of the majority of RTX-40-series GPUs a few weeks ago. However, the latest rumours suggest that one 40 series GPU, the RTX-4050 mobile, may still be available after the replacement launch.

The only question left is why gaming revenue has risen so much compared to the last quarter and year. We've known that the GPU market has been doing well for a few months, but 15% growth in gaming revenue year-on-year is impressive.

I can think about a few reasons. The first reason is, well, obvious: GPUs are used for AI. As this is gamingrevenue, and there are many AI-centric machines that are not gaming-centric, I figure it can't be all of the increase.

It seems more likely that people are buying RTX-40-series gaming PCs and laptops because prices have dropped. While discrete graphics cards haven't fallen much, we've seen great gaming PC deals in the last few months.

Prices have dropped as Nvidia has been destroying RTX 40 series stock and companies have been preparing 50-series system. Many gamers have taken advantage of the opportunity to grab the best deal while it is still available, knowing that next generation systems will be expensive at first, especially since Nvidia launches their high-end cards before anyone else.

Nvidia's increased revenues and the looming specter of RTX graphics cards are great news for us. Even if they seem like a small thing to Nvidia, given its even larger AI profits.