Mikneam to California: Nvidia’s amazing numbers in Israel

By comparison, Nvidia’s core product activity, from graphics processors to cloud servers and artificial intelligence, grew by only 58%. The revenue of the activity based on Mellanox crossed the 10 billion dollar mark for the first time and settled at 11 billion, which makes it, perhaps, the most profitable Israeli company – at least 40 billion dollars a year. The growth rate also increased, when in the previous quarter it showed a growth of 164% compared to the third quarter in 2024.

In addition, the report reveals the scope of activity in Israel. Thus, it appears that the number of its employees in Israel already reaches almost 6,000 people, during the last year it was announced that it employs about 5,000 workers here. The value of Nvidia’s assets in Israel increased from $840 million in 2024 to $1.47 billion last year. For comparison, in 2023 it was only 325 million dollars. The tax she pays in Israel increased to 1.287 billion dollars, or close to 4 billion shekels.

“The point of view has moved to server farms”

The revenue rate of the Israeli communications division of Nvidia’s total revenue stands at 16%, similar to the rate in the second quarter of the past year, except that the company’s communications chips are becoming its biggest growth engine – which also explains Huang’s decision to approve two months ago the establishment of the company’s large campus in Kiryat Tivon – which will employ workers mainly related to communications activities.

What makes the activity of communication processors so central to the growth of Nvidia? Gilad Sheiner, senior vice president of marketing at Nvidia and the product manager of the communication chips field, explained in an interview he gave at the end of last year to Globes: “A few years ago the main important thing we looked at was the graphics processor (GPU) and the core processor (CPU), but today, in the age of AI, the point of view has shifted to the server farm – that is, the facility where the servers where these and other chips are embedded are placed. You plan the server farm from the ground up as a single unit And you need to know what will make it work in the best way as a single unit. This is where the importance of connecting the chips, between the server cabinets and between one farm located at a certain point on the globe, to another farm that can be on the other side. Huang saw this already and decided to purchase Mellanox.”

Unlike older server farms that served at most the cloud domain, the processing activity of artificial intelligence requires not only multiple powerful graphics processors, but also joint work between them and perfect synchronization – in order to avoid a situation where chips that have finished their work wait for new information to process.” The bottleneck in AI farms today is not the number of graphics processors embedded in them, but the memory limitations they display and the ability to process information at high rates. These “bottlenecks” in the processing capabilities of the graphics chips are sought to be solved by Nvidia using communication switches, routers and software that serve as roads and traffic lights for the information flowing within the server farm.

Not everything is rosy in the kingdom of Anvidia

When you look at the reports, it seems that there is no limit to Nvidia’s growth: the graphics processor giant grew by 75% in revenue compared to the corresponding quarter and even increased its gross profit margin – contrary to all forecasts, from 73% to 75%. The gross profit forecast for the current quarter will also remain at 75%, which indicates confidence in its high pricing and its competitive advantage, even though the competitors – Google and AMD – are tailing it.

However, the meteoric increase in demand for chips for server farms overshadows the quarterly decline in revenues from chips for graphic game cards (a 13% drop), and stagnation in the chips and services division for the automotive market, a product that, among other things, should also challenge companies like Mobileye. The growth in technological solutions for the car, which was also reflected in a 9% decrease in the Israeli Mobileye’s revenues, is also well reflected in Nvidia’s reports with quarterly growth of 2% and annual growth of 6%, to 604 million dollars in the fourth quarter.