The chipmaker's $6.9 billion Mellanox acquisition is paying off in ways few predicted, with 647% year-over-year revenue growth in the networking segment.
Nvidia just claimed the top spot in data center Ethernet switching revenue for the first time. In Q2 2025, Nvidia pulled in $2.3 billion in data center Ethernet switch revenue, a 647% year-over-year increase that gave it a 25.9% market share. That’s enough to leapfrog Arista Networks and Cisco, two companies that have owned this space for years.
From chip company to networking giant #
The story here starts in April 2020, when Nvidia acquired Mellanox Technologies for $6.9 billion. Mellanox gave Nvidia the foundation for what eventually became the Spectrum-X Ethernet platform. Spectrum-X combines Ethernet switches with Data Processing Units, or DPUs, to create high-performance networking fabrics specifically optimized for AI workloads.
The growth trajectory has been steep. In Q1 2025, Nvidia generated approximately $1.46 billion in data center Ethernet switch revenue, representing an 8.6x year-over-year increase. By Q2 2025, that figure jumped to $2.3 billion. As of Q1 2026, Nvidia maintained its position at the top of the leaderboard in a market that grew 39.8% year-over-year to reach $15.4 billion.
The AI infrastructure arms race is reshaping the market #
Overall Ethernet switch sales exceeded $8 billion in Q3 2025, more than double from three years prior. Nvidia held an 11.6% share in that quarter when measured across all Ethernet switching, not just data center. The data center-specific segment is where Nvidia’s dominance is most pronounced.
What this means for investors #
The $6.9 billion Mellanox acquisition now looks like one of the shrewdest deals in recent tech history. A single quarter of Ethernet switching revenue, $2.3 billion, represents a third of the entire acquisition price.
Traders should watch Nvidia’s networking segment as a leading indicator of broader AI infrastructure spending. The overall data center Ethernet switch market grew nearly 40% year-over-year as of Q1 2026.
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