Nvidia’s quarterly sales top $5 billion for first time ever

Nvidia Corp. reported Wednesday that quarterly sales topped $5 billion for the first time in the fourth quarter, as holiday gaming-chip demand and renewed interest in cryptocurrency mining vied with supply shortages.

Gaming sales surged 67% to a company record $2.5 billion, on gaming-card demand that Chief Executive Jensen Huang called “incredible.” Analysts surveyed by FactSet had expected Nvidia gaming sales of $2.36 billion.

Meanwhile, gaming-card supply shortages will likely remain going forward, said Colette Kress, Nvidia’s chief financial officer, on Wednesday’s conference call.

“The entire 30-series lineup has been hard to keep in stock and we exited Q4 with channel inventories even lower than when we started,” Kress said on the call. “Although we are increasing supply, channel inventories will likely remain low throughout Q1.

Nvidia announced last week that it hopes to ease shortages of gaming cards by launching a chip designed for cryptocurrency mining, called the CM. Cryptocurrencies like bitcoin BTCUSD, +2.27% and ethereum ETHUSD, +2.55% have soared to records over the past year, and a demand from miners to catch that rush has eaten into gaming supplies.

On the call, Kress said the company expects about $50 million from CMP sales in the first quarter, and the company plans to break out cryptocurrency-related sales in the future.

On the data-center side, sales nearly doubled to $1.9 billion from the year-ago period, while analysts expected sales of $1.85 billion.

“Our A100 universal AI data-center GPUs are ramping strongly across cloud-service providers and vertical industries” Huang said. “Thousands of companies across the world are applying Nvidia AI to create cloud-connected products with AI services that will transform the world’s largest industries. We are seeing the smartphone moment for every industry.”

Huang explained that more and more products are becoming like smartphones — in other words, products that require communicating with AI services that run in data centers in order to function optimally.

“You’re going to see smart lawnmowers, smart tractors, smart air conditioners, smart elevators, smart buildings, smart warehouses, robotic retail stores, entire store — the entire retail store is like a robot,” Huang said. “And they will all have autonomous capability, they’ll all be driven by AI.”

Read: Worldwide chip shortage expected to last into next year, and that’s good news for semiconductor stocks

For the first quarter, Nvidia forecast revenue of $5.19 billion to $5.41 billion, while analysts had forecast revenue of $4.49 billion on average.

Nvidia NVDA, +2.52% reported fourth-quarter net income of $1.46 billion, or $2.31 a share, compared with $950 million, or $1.53 a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were $3.10 a share, compared with $1.89 a share in the year-ago period.

Revenue surpassed $5 billion for the first time, by about $3 million, up 61% from $3.11 billion in the year-ago quarter, during a holiday season in which gamers found it difficult to find graphics cards, much less ones near the suggested retail price, as cryptocurrency prices skyrocketed. Just three months ago, Nvidia sales set a record by surpassing $4 billion in quarterly sales for the first time.

Analysts surveyed by FactSet had estimated $2.81 a share on revenue of $4.82 billion, based on Nvidia’s revenue forecast of $4.7 billion to $4.9 billion.

Shares, which had been up about 2% at the beginning of the call, were last down about 3% after hours. That followed a 2.5% rise in the regular session to close at $579.96.

Over the past 12 months, Nvidia shares have rallied 112%, while the PHLX Semiconductor Index SOX, +3.24% has gained 77%. Meanwhile, the S&P 500 index SPX, +1.14% rose 22%, and the Nasdaq Composite Index COMP, +0.99% gained 47%. Nvidia shares closed at a record high of $613.21 on Feb. 16.

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