Nvidia Profits Smash Wall Street Estimates Again, Company Tempers China Outlook

Nvidia (NVDA) reported third-quarter results after the bell Tuesday that once again beat Wall Street expectations, as the artificial intelligence boom continues to fuel demand for the company’s chips .

The chipmaker reported adjusted earnings per share of $4.02 on revenue of $18.12 billion, both above analysts’ expectations. Analysts had expected adjusted earnings per share of $3.36 on revenue of $16.1 billion, according to Bloomberg data.

Third-quarter revenue increased 34% from the previous quarter and 206% from last year, reflecting how increased demand for AI has driven the company’s sales throughout long from 2023.

The company’s revenue forecast for the current quarter also beat estimates, coming in at $20 billion, plus or minus 2%; analysts were forecasting a fourth-quarter forecast of $17.8 billion.

“Our strong growth reflects the transition from large-scale industrial platform, accelerated computing to large model accelerated computing language and generative AI startups. Consumer Internet companies and global cloud service providers are the “first movers,” Nvidia CEO Jensen Huang said Tuesday during the company’s earnings conference call. night. “The next waves are starting to form. Nations and regions (cloud service providers) are building AI clouds to meet local demand.”

The stock market’s reaction to the report, however, was muted, with the company emphasizing that new restrictions on chip exports to China would weigh on results.

Shares of the chipmaker were down more than 1% after hours Tuesday evening.

“Our sales in China and other relevant destinations, derived from products now subject to licensing requirements, have consistently contributed approximately 20-25% of data center revenues over the past few quarters,” said Colette Kress , CFO of Nvidia, in a press release.

“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.”

Kress elaborated on the impact of export restrictions to Asia when he spoke to investors Tuesday evening. She noted that fourth-quarter guidance could have been higher without the restrictions, but it is possible that Nvidia will launch new products in coordination with the U.S. government.

“Export controls will have a negative effect on our business in China, and we do not have good visibility on the magnitude of this impact, even in the long term,” Kress said.

The chipmaker reported revenue of $14.51 billion for its data centers, which includes its AI chips; the street had forecast revenue of $12.82 billion for this segment. Nvidia’s gaming revenue was $2.86 billion for the quarter, also higher than the $2.7 billion expected by analysts. Annual growth in these segments stood at 279% and 81%, respectively, during the quarter.

This report came after the stock closed at a record high of $504.09 per share on Monday. Nvidia stock fell about 0.9% Tuesday ahead of the results along with the broader market.

Earlier this year, Nvidia stock saw a notable move following the earnings release.

In August, the stock hit a record high after Nvidia reported second-quarter results that beat Wall Street’s expectations for revenue and earnings per share, as well as beating high estimates. Last May, an analyst called the company’s forecast “advice for the future.”

Printing could also have significant implications for the entire market. Nvidia has been a driver of stock market momentum this year as a key member of the “Magnificent Seven” stocks — alongside Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN) , Meta (META) and Tesla (TSLA).

Together, these stocks have gained more than 70% this year through mid-November, compared with a 6% rise for the remaining 493 stocks in the S&P 500.

SUQIAN, CHINA - AUGUST 10, 2023 - Illustration Nvidia lost more than $52 billion in market value overnight on August 10, 2023, Suqian, Jiangsu Province, China.  (Photo credit should read CFOTO/Future Publishing via Getty Images)

The Nvidia logo under a magnifying glass. (CFOTO/Future Publishing via Getty Images) (Future publication via Getty Images)

Josh Schafer is a reporter for Yahoo Finance.

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