Nvidia profits beat analyst forecasts as data center business booms

Key takeaways

  • Nvidia far exceeded analysts’ expectations for the third quarter, both in terms of revenue and profits.
  • However, investors had even higher expectations for the company and its shares lost ground after hours.
  • Nvidia is still on track to continue its meteoric growth, as it holds up to 95% market share in the AI ​​chip space.

Nvidia (NVDA) beat analysts’ expectations for third-quarter financial results after the bell Tuesday, as adjusted earnings per share (EPS) and revenue were several times higher than year-ago quarter levels while as the AI ​​space continues to heat up.

Nvidia reported net income of $9.2 billion on diluted EPS of $3.71 per share, up 1,274% from the same period last year. Revenue soared 206% to $18.1 billion, amid a massive increase in data center revenue.

Nvidia expects fourth-quarter revenue of $20 billion, plus or minus 2%, but investors clearly had even higher expectations despite the massive growth, with the stock falling about 1% after opening hours.

The company’s data center business, critical to companies providing popular services like cloud and AI, has reached stratospheric heights. For the latest quarter, data center revenue hit a record $14.51 billion, up from $3.8 billion at the same time last year and more than the $12.7 billion forecast by analysts surveyed by Visible Alpha.

Among chipmakers, Nvidia is perhaps best positioned to benefit from the continued surge in interest in AI. Nvidia’s products are in high demand and the company has up to 95% market share in the AI ​​chip space.

This is despite the United States launching export controls that could limit the chipmaker’s ability to deliver products to China, one of the fastest-growing markets. Indeed, Nvidia responded quickly with a new range of products designed for the Chinese market and compliant with US export restrictions.

A day before releasing its third-quarter results, Nvidia stock hit an all-time high of more than $504 per share. The company’s shares have more than tripled over the past year as of November 21, 2023.

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