Nvidia Corp CEO Jensen Huang holds one of the company’s new RTX 4090 gaming chips in this undated photo provided on Sept. 20, 2022.
Nvidia Corp | via Reuters
Nvidia shares rose more than 8% in extended trading on Wednesday after the company reported slightly higher revenue and net income than Wall Street expected, despite year-over-year declines in both categories. Here’s how the chipmaker fared against Refinitiv’s consensus expectations for the quarter ending in January:
- EPS: $0.88, adjusted, vs. $0.81 expected
- Revenues: $6.05 billion versus $6.00 billion expected
Nvidia reported $0.57 in GAAP net income per share. Nvidia is forecasting first-quarter revenue of $6.5 billion, more than the $6.33 billion expected by Wall Street.
Although both revenue and profit fell from last year’s $1.32 a share and $7.64 billion in revenue, investors increasingly see Nvidia as one of the chip stocks best positioned to weather an economic slowdown that is hurting PC and semiconductor sales.
Nvidia’s data center business, which includes AI chips, continued to grow, suggesting it could continue to benefit significantly from AI software such as ChatGPT and Microsoft Bing’s AI chatbot. Nvidia GPUs are suitable for training and running machine learning software.
Shares were up roughly 45% in 2023 ahead of Wednesday’s earnings report.
Nvidia CEO Jensen Huang told analysts that artificial intelligence is at an “inflection point” and is pushing businesses of all sizes to buy Nvidia chips to develop machine learning software.
“The versatility and capabilities of generative AI have created a sense of urgency for businesses around the world to develop and implement AI strategies,” said Huang.
Most of Nvidia’s AI GPU sales fall into the enterprise data center category. Data center revenue rose 11% year-over-year to $3.62 billion. The company said the growth was due to US cloud service providers buying more products.
As expected, gaming revenue has declined as sales have been very strong for the past few years. The pandemic has encouraged gamers to upgrade their systems with new graphics cards from companies like Nvidia, but sales have slowed significantly in the past year.
Specifically, Nvidia reported $1.83 billion in gaming revenue for the fourth quarter, a 46% decline from the same period last year. The company said the drop was due to selling fewer tokens to partners as they currently have too much inventory.
Nvidia also said it shipped fewer game console chips during the quarter, which is reported in the gaming category. Nintendo uses an Nvidia chip to power the Switch.
Other categories, such as professional visualization and automotive chips, remain much smaller than the company’s gaming and data center businesses. Nvidia’s professional visualization division for designers reported revenue of $226 million, down 65% year-over-year, and automotive revenue was $294 million, up 135% from last year.