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The graphic chip giant has become the top semiconductor maker in the U.S., eclipsing Intel.
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Shares of
Nvidia slipped in late trading Wednesday despite reporting strong financial results for its latest quarter ended. The chip maker also provided an impressive forecast for its current quarter ending in April.
Nvidia (ticker: NVDA) CEO Jensen Huang told Barron’s the company continues to see demand exceeding supply, but with supply improving in the second half of the fiscal year.
Nvidia reported $7.64 billion in revenue, up 53% from the year-ago quarter and above the October quarter, while adjusted earnings were up 69% to $1.32 a share. Wall Street analysts had expected revenue of $7.42 billion and adjusted profits of $1.23 a share. Under generally accepted accounting principles, the company earned $1.18 a share.
For the full fiscal year ended in January, the company posted revenue of $26.9 billion, up 61%, with adjusted profits of $4.44 a share, up 78%.
For the April quarter, Nvidia is projecting revenue of $8.1 billion, give or take 2%, with gross margins of 65.2% on a GAAP basis and 67% on a non-GAAP basis. That’s well above the Wall Street consensus revenue forecast of $7.3 billion. Analyst see adjusted profits of $1.19 a share in the quarter. The company noted that it will recognize a $1.36 billion charge in the quarter to reflect costs related to its terminated agreement to buy Arm from SoftBank.
Huang said the vast majority of the strong growth in the April quarter will be driven by the company’s data center business, including hyperscale cloud providers, internet services, and others.
Earlier Wednesday, Nvidia announced a deal with Jaguar Land Rover to supply the company’s automotive platform to all new Jaguar and Land Rover cars starting in 2025. While the automotive segment is a relatively small part of the business now, Huang says that the inflection point for that business will be in the second quarter – and he says that eventually automotive software should be one of the company’s largest business.
Despite the strong January quarter numbers, Nvidia shares were off 2.4% in late trading. The stock has risen 73% over the last 12 months.
“We are seeing exceptional demand for Nvidia computing platforms,” Huang said in a statement. “Nvidia is propelling advances in AI, digital biology, climate sciences, gaming, creative design, autonomous vehicles and robotics—some of today’s most impactful fields.” He added that the company is entering the new fiscal year “with strong momentum across our businesses and excellent traction with our new software business models.”
Nvidia said gaming revenue in the January quarter was $3.42 billion, up 37% from a year ago, while data center revenue was $3.26 billion up 71%. Revenue from the professional visualization segment was $643 million, up 109%, while the automotive and robotics segment was $125 million, down 14% from a year ago.
Wedbush analyst Matt Bryson wrote in a research note previewing the quarter that Nvidia was likely to post “another strong quarter and guide.” But he maintained a Neutral rating on the shares, citing concerns about valuation.
“We expect another quarter of data center upside, with the magnitude of growth likely continuing to be dictated by supply challenges rather than any shortage of end demand,” Bryson wrote. “And we would expect guidance will also be robust, with a strong likelihood that Nvidia does not forecast a seasonal dip in sales as anticipated by Street numbers.”
Citi analyst Atif Malik wrote in a research note ahead of the quarterly results that investor focus would likely be on data center growth, the state of supply constraints, and gaming demand outlook for 2020. He contends that data center trends should “remain solid” in 2022, with artificial intelligence and machine learning still in the early innings.
Write to Eric J. Savitz at eric.savitz@barrons.com
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