Backbone of a beast – charting Nvidia's rise to networking titan

Nvidia is widely recognized as a leader in graphics and AI hardware, but it has also emerged as a dominant player in the networking industry. In the second quarter of 2021, the company's networking revenues reached an impressive $17.5 billion, surpassing Cisco's total revenue of $17.3 billion during the same period.

In 2019, Nvidia's CEO Jensen Huang initiated the company's entry into the networking space with the acquisition of Mellanox, a networking partner with a strong reputation in Ethernet switching. At the time, Mellanox was mostly known for its ConnectX NICs and InfiniBand switches, which were primarily used in high-performance computing (HPC) and supercomputing clusters, as well as some deployments at Microsoft.

The acquisition allowed Nvidia to reposition itself as a system builder, catering to datacenter customers who were more interested in deploying clusters of systems rather than individual GPUs or servers. This approach was made possible by Mellanox's InfiniBand technology, which provided an ideal interconnect solution for Nvidia's datacenter customers.

Jensen Huang's concept of "co-design" - designing components and software to work together for specific jobs - played a crucial role in Nvidia's success. This philosophy was evident in the company's integration of compute and networking, which streamlined deployments and accelerated time to market for customers.

Recursion, an AI and machine learning company founded in 2013, serves as a prime example of the benefits of Nvidia's integrated architecture. The company faced significant challenges in processing massive datasets totaling over 50 petabytes for drug discovery. Recursion's second cluster, which utilized Nvidia's Quantum InfiniBand switches and ConnectX NICs, simplified optimization and troubleshooting by treating the system as a single entity, rather than separate compute and networking resources.

Nvidia's networking revenues have experienced steady growth since the Mellanox acquisition, with two notable inflection points: a surge in 2023 following the launch of OpenAI's ChatGPT, and another significant increase in 2024-2025 with the introduction of Blackwell-generation GPUs and the rapid shipping of these accelerators in large quantities.

This growth was largely driven by the widespread adoption of Nvidia's Spectrum-X Ethernet switches in AI back-end networks, as well as their use in large-scale supercomputers such as Elon Musk's Colossus.