Everyone is focused on NVIDIA's chips, and Jensen Huang has already cultivated a "second pillar."

As the market's attention focuses on NVIDIA's AI chips, Jensen Huang has quietly built a "second pillar" worth hundreds of billions of dollars. This data center networking business, strategically acquired in 2020, has now become one of NVIDIA's most profitable and fastest-growing divisions.

In just a few years, the networking business aimed at connecting data centers has grown to become NVIDIA's second-largest revenue driver, next to its computing business. According to NVIDIA's latest financial report, the department's revenue reached $11 billion in the last fiscal quarter, a staggering year-on-year increase of 267%, with annual revenue exceeding $31 billion.

This astonishing growth rate and scale have directly reshaped the competitive landscape of the networking equipment market. Kevin Cook, a senior stock strategist at Zacks Investment Research, pointed out that NVIDIA's quarterly networking revenue has already surpassed the annual networking revenue estimates of the established networking giant Cisco.

The Cornerstone of the "AI Factory"

The explosion of NVIDIA's networking business is directly benefiting from the surge in AI processing demand. The department's technology matrix includes NVLink for connecting GPUs in data center racks, InfiniBand Switches for in-network computing platforms, Spectrum-X for AI networking Ethernet platforms, and co-packaged optical switches.

These technologies combine to form all the infrastructure needed to build an "AI factory" (data centers specifically designed for training AI models).

Kevin Deierling, senior vice president of NVIDIA's networking business, stated, "People often think of networking as just 'I have a printer, and I need to connect it.' But from the first day Huang said, data centers are the new computing units. Networking is not just about moving small amounts of data between computing nodes; it is actually foundational."

The Vision Behind the $7 Billion Acquisition

The starting point of this massive business was NVIDIA's $7 billion acquisition of the Israeli networking company Mellanox in 2020. Deierling joined NVIDIA through this acquisition.

Initially, Deierling did not fully understand why Huang bought Mellanox at that time, but he understands now. Having a networking business allows NVIDIA to package GPUs with the most compatible networking technologies for sale.

"When Huang acquired Mellanox in 2020, he saw it as the missing piece to make GPUs a complete solution," analyst Cook stated.

In addition to technological leadership, the success of NVIDIA's networking business is also attributed to its unique business model. Deierling pointed out that NVIDIA sells these technologies as a full-stack solution rather than selling components separately and pushes them to market through partners.

"I can't think of any other company that has our full-stack capability," Deierling said. "We built a complete computing stack, a fully integrated stack, and then pushed it to market through all our partners." At the Nvidia GTC technology conference on March 16, NVIDIA further solidified this advantage by launching a series of network system updates, including the Rubin platform (which includes six new chips), the Inference Context Memory Storage platform, and more efficient Spectrum-X Ethernet Photonics switches.

“The network is no longer an external device that connects printers or other slow I/O devices,” Deierling emphasized. “It is the foundation of computing. In the past, computers had backplanes. Today, the network is the backplane of the AI factory, and it is extremely important.”