NVIDIA Leads in Semiconductor Profitability Thanks to Rise of Generative AI

NVIDIA is leading the race for profitability in the semiconductor industry, with third-quarter revenue of a staggering $18.12 billion and profit of $10.42 billion, outpacing rivals like Intel and TSMC. That represents a 206 percent year-over-year increase, driven in large part by the company's strategic focus on AI chips as part of the current generative AI boom.

Dan Nystedt, a financial researcher in Taipei, acknowledged NVIDIA's big jump from its first-quarter ranking and attributed its success to strong sales of AI data center chips. The company's data center division has been a key driver of that growth, and while it relies on TSMC for chip manufacturing, it leverages NVIDIA's extensive intellectual property portfolio.

As NVIDIA celebrated a lucrative quarter, Samsung (KS: 005930) Semiconductor faced challenges, with revenue falling to $12.52 billion and losses totaling $2.86 billion. The slowdown in the memory market had an impact on Samsung Semiconductor, although the company has made a strong recovery under Ki-bong Jeong's guidance with the introduction of LPDDR5X DRAM and the start of production of high-performance computing (HPC) chips.

The semiconductor industry is not without environmental problems. Greenpeace has called on companies like Samsung Semiconductor, which has a D+ decarbonization rating, to improve their practices. Competitors like Foxconn are increasing their renewable energy ratios as the industry faces potential emissions of tens of millions of carbon dioxide equivalents by 2030. Samsung's commitment to becoming carbon neutral by 2050 underscores the urgency of addressing not just direct emissions, but problems. There's also from the supply chain.

While NVIDIA is leading the way with its profitable AI-driven strategy, Samsung Semiconductor is poised to regain the lead with its technological advances and commitment to environmental responsibility, despite current financial setbacks. $NVIDIA(NVDA.US)$ $Advanced Micro Devices(AMD.US)$ $Taiwan Semiconductor(TSM.US)$ $Samsung Electronics Co., Ltd.(SSNLF.US)$