Nvidia has been quietly building a multibillion-dollar behemoth to rival its chip business

Nvidia CEO Jensen Huang was years ahead of the market when he pushed the company to start tinkering with building AI-specific chips in 2010, more than a decade before the current hype around AI. A similar move in 2020 — doubling its data center network through a strategic acquisition — gave rise to one of the company’s most profitable and fast-growing divisions, but without much fanfare.

In just a few years, Nvidia’s networking business, designed to connect data centers, has grown into the company’s second-largest revenue driver after computing. Last quarter, it reported $11 billion in revenue, a 267% year-over-year increase, and brought in more than $31 billion for the full year, according to Nvidia’s latest earnings.

Driven by the growth in AI processing, the division includes technologies such as NVLink, which powers communication between GPUs on a data center rack, Nvidia InfiniBand Switches, an in-network computing platform, Spectrum-X, an Ethernet platform for AI networking, and co-packaged optics switches, among others.

Together, Nvidia’s networking business includes all the technology needed to build an “AI factory,” a data center designed to train AI models.

Nvidia’s networking business is one of the company’s most impressive new segments, Kevin Cook, chief equity strategist at Zacks Investment Research, told TechCrunch. “[Nvidia’s networking business] Reports $11 billion for the quarter. “This number is larger than Cisco’s networking business, and is almost as large as the full-year estimate,” Cook said, adding that it does in one quarter what Cisco’s business does in one year.

However, the business is not attracting the same attention as the company’s chip business, which is much larger. It also doesn’t get as much buzz as the company’s gaming business, which is its original bread-and-butter business, and is roughly three times smaller.

The origin of Nvidia’s networking business comes from Mellanox, a networking company founded in Israel in 1999 and acquired by Nvidia in 2020 for $7 billion.

Kevin Deierling is senior vice president of networking at Nvidia and joined the company through the acquisition of Mellanox. Deierling told TechCrunch that people who don’t know Nvidia’s networking business might be his fault because he did a poor job of marketing it — but he doesn’t like that answer.

“People think networking is just, ‘I have a printer and I need to connect to it,’” Dearling said. “Jensen said this on the first day when he acquired us, he said the data center is the new unit of computing. Networking is much more than just transferring small amounts of data between compute nodes, it is actually a foundation.”

While Dearling said he didn’t really understand why Huang bought the company when he did, he does now. Having a networking business alongside its GPU business allows the company to sell its chips with the technology that works best with them.

“When Jensen bought Mellanox in 2020, he saw this as the missing piece to make GPUs a complete package,” said Zack analyst Cook.

Deierling added that he believes another aspect of Nvidia Networks’ success is that they only sell the technology as an integrated solution, rather than individual components, and they do not sell the technology themselves, but rather through their partners.

“I can’t think of other companies that have [the] “The full capabilities that we have, we’re really different,” Dearling said. “We build a complete compute stack, a fully integrated stack, and then we go to market through all of our partners.”

Nvidia just announced a brand new series of updates to its networking system during Huang’s March 16 keynote at the company’s annual Nvidia GTC technology conference. The company launched the Nvidia Rubin platform, which includes six new chips to run an “artificial intelligence supercomputer.” Nvidia also announced the new Nvidia Inference Context Memory Storage platform and more efficient Nvidia Spectrum-X Ethernet Photonics switches, among other products.

“It’s no longer connecting a printer to a peripheral, or some other slow I/O device,” Dearling said of networking. “It’s fundamental to the computer. In the old days, we had what’s called the back-lining inside the computer. Today, the network is the back-lining of the AI ​​factory, and it’s extremely important.”