Nvidia (NVDA) Third Quarter 2024 Earnings Report

Nvidia shares fell 1% in extended trading Tuesday after the chipmaker reported fiscal third-quarter results that beat Wall Street forecasts. But the company expects a negative impact in the next quarter due to export restrictions affecting sales to organizations in China and other countries.

“We expect our sales to these destinations to decline significantly in the fourth quarter of fiscal 2024, although we believe this decline will be more than offset by strong growth in other regions,” the company said. Nvidia’s financial director, Colette Kress, in a letter to shareholders.

In a conference call with analysts, Kress said Nvidia was working with some customers in the Middle East and China to obtain licenses from the U.S. government to sell high-performance products. Nvidia is trying to develop new data center products that comply with government policies and don’t require licensing, but Kress said she doesn’t think they will be significant in the fiscal fourth quarter.

Here’s how the company performed, compared to the consensus among analysts surveyed by LSEG, formerly known as Refinitiv:

  • Earnings: $4.02 per share, adjusted, versus $3.37 per share expected
  • Income: $18.12 billion, versus $16.18 billion expected

Nvidia’s revenue increased 206% year-over-year in the quarter ended October 29, according to a statement. Net income, at $9.24 billion, or $3.71 per share, was up from $680 million, or 27 cents per share, in the same quarter a year ago.

The company’s data center revenue totaled $14.51 billion, up 279% and above the StreetAccount consensus of $12.97 billion. Half of data center revenue came from cloud infrastructure providers such as Amazon, and the other half from consumer internet entities and large enterprises, Nvidia said.

Healthy adoption has come from clouds specializing in leasing GPUs to customers, Kress said on the call.

The gaming segment contributed $2.86 billion, up 81% and above the StreetAccount consensus of $2.68 billion.

As for the forecast, Nvidia reported revenue of $20 billion for the fiscal fourth quarter. This implies revenue growth of almost 231%.

During the quarter, Nvidia announced the GH200 GPU, featuring more memory than the current H100 and an additional Arm processor onboard. The H100 is expensive and in demand. Nvidia said Australian company Iris Energy, which owns Bitcoin mining data centers, was buying 248 H100s for $10 million, which equates to about $40,000 each.

Computing instances based on GH GPUs will soon be available on Oracle’s cloud, Kress said on the call.

Just two years ago, sales of GPUs for playing video games on PCs were Nvidia’s main source of revenue. The company now derives most of its revenue from deployments within server farms.

The introduction of the ChatGPT chatbot by Microsoft-backed startup OpenAI in 2022 has many companies looking for ways to add similar generative artificial intelligence capabilities to their software. As a result, demand for Nvidia’s GPUs has strengthened.

Nvidia faces hurdles including competition from AMD and declining revenue due to export restrictions that may limit sales of its GPUs in China. But before Tuesday’s report, some analysts were nevertheless optimistic.

“GPU demand continues to outpace supply as AI generation adoption expands across all industry verticals,” Raymond James’ Srini Pajjuri and Jacob Silverman wrote in a note Monday to customers, with a “strong buy” recommendation on Nvidia shares. “We are not too concerned about competition and expect NVDA to maintain a share above 85% in AI generation accelerators even in 2024.”

Nvidia is still working on its plan to increase supply throughout next year, Kress said on the call.

Excluding after-hours movement, Nvidia stock is up 241% so far this year, significantly outperforming the S&P 500 index, which is up 18% over the same period.

This is breaking news. Please check again for updates.

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