Nvidia shares rise 3% on strong gaming, data center sales gains
$NVIDIA (NVDA.US)$ shares rose almost 4% in after-hours trading, Wednesday, as the graphics chipmaker reported better-than-expected third-quarter results that included big gains in its core gaming and data center businesses.
The results come after Nvidia touted its Omniverse strategy at its GTC conference last week. Chief Executive Jensen Huang said Wednesday that Nvidia's Omniverse platform, which allows people to create in virtual environments in realtime, is going to be the next big business driver for the chipmaker.
"Omniverse brings together Nvidia's expertise in AI, simulation, graphics and computing infrastructure. This is the tip of the iceberg of what’s to come," Huang said.
For its third quarter, Nvidia said gaming revenue rose 42% from a year ago, to $3.22 billion, while data-center sales climbed by 55%, to $.294 billion. With those two product lines in the lead, Nvidia reported total third-quarter revenue of $7.1 billion, a 50% increase over the year-ago period. Wall Street analysts had forecast Nvidia to report $6.82 billion in sales for the quarter.
Earnings also surpassed expectations, as Nvidia reported a profit of $1.17 a share, excluding one-time items, while analysts had forecast a profit of $1.08 a shares.
Going forward, Nvidia expects its fourth-quarter revenue to reach $7.42 billion, "plus or minus 2%".
Matthew Bryson, who covers Nvidia for Wedbush, said the company had a "really good data center [revenue] number, but expectations, obviously are sky high." Bryson said that Nvidia (NVDA) often sees some pressure on its gaming business during the fourth quarter of the year, but that could imply more strong datacenter sales are in the works. Bryson holds a neutral rating and $300-a-share target price on Nvidia's stock.
On a conference call to discuss Nvidia's results, Chief Financial Officer Colette Kress said the company was still committed to its proposed $40 billion acquisition of U.K. chip-technology developer Arm despite concerns raised by the U.S. Federal Trade Commission and antitrust regulators in the U.K.
"[Acquiring] Arm is a great opportunity for the industry and customers," Kress said. "We can assist in expanding Arm's IP [intellectual property]. We believe in the benefits of the acquisition."
Wedbush's Bryson said the U.K. investigations is a concern, but he thinks the deal will eventually get blocked by Chinese governmental regulators as part of an ongoing crackdown on the practices of many tech companies in China.
"The larger issue is trying to satisfy China, U.S. and U.K. demands where U.S., and to some extent, U.K. goals are seemingly in direct opposition to those of China [and] semiconductor [industry] autonomy."
On Tuesday, the U.K.'s antitrust regulator confirmed it has launched a "Phase 2" investigation based on concerns about anti-competitive issues involving the deal.
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Dogoro777 : Quite an upbeat rev guidance of 7.42 bn for Q4. I think consensus was 6.86.
baby boomers : If NVDA is able to perform well in this environment, I wonder how well it would do if the supply issues went away.
hairless : Since when does USA and UK need chinas approval for an acquisition?
Leoi hairless : because China is a big market so
rppIg2As8t : AH +12.19.
v5PvYvukTK : I’m not an expert here. Isn’t the Q4 guidance quite low for a high growth company?
Lee Jessie v5PvYvukTK : 4%? First, 4% is off a big beat, 2nd, their normal beat and raise is 2%.
qPg7PBSdvS v5PvYvukTK : Q4 guidance just raised from $6.86B to $7.42B
long NVDA since $19 pre split, the last 7 years, and I guess the next 7 years, the din of non engineers non developers missing it
BfqseGOSuE v5PvYvukTK : Lol, 7.5 billion would be 50% growth Y/Y
uploading BfqseGOSuE : How does 4% sequential growth translate to 40-50% YoY which is their growth? Is there seasonality I’m missing?
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