Nvidia (NVDA) reported robust third-quarter (Q3) earnings on Tuesday after market close, outperforming Wall Street expectations yet again, fueled by the ongoing artificial intelligence (AI) boom propelling demand for the company’s chips.
The chipmaker posted adjusted earnings per share of $4.02 on revenue totaling $18.12 billion, surpassing analysts’ predictions. According to Bloomberg data, market analysts had forecasted adjusted earnings per share of $3.36 on revenue of $16.1 billion.
A remarkable 34% increase in third-quarter revenue from the prior quarter and an astounding 206% surge from the same period last year underscore the surging demand for AI-related products, contributing to Nvidia’s stellar sales performance throughout 2023.
During the Q3 earnings call on Tuesday night, Nvidia CEO Jensen Huang attributed the company’s robust growth to the industry-wide shift from general-purpose computing to accelerated computing and the rise of generative AI large language model startups. Huang highlighted the initial movers in this transition, including consumer internet companies and global cloud service providers, emphasizing the emergence of new waves with nations and regional cloud service providers establishing AI clouds to cater to local demand.
Despite the positive Q3 earnings report, Nvidia stock experienced a 3% dip on Wednesday, reflecting a measured market response. The company cited new restrictions on chip exports to China as a potential weight on future results.
At the time of this publication, NVIDIA Corp stock (NVDA) has witnessed a decline.
NVIDIA Corp
Current Price: $483.55
Change : -15.89
Change (%): (-3.18%)
Volume: 47.2M
Source: Tomorrow Events Market Data
Nvidia CFO Colette Kress acknowledged the impact of export restrictions in a release, noting that sales to China and other affected destinations, accounting for approximately 20-25% of Data Center revenue in recent quarters, were now subject to licensing requirements. Kress anticipated a significant decline in sales to these destinations in the fourth quarter of fiscal 2024 but expressed confidence that strong growth in other regions would offset the loss.
Addressing investors, Kress elaborated on the potential impact of export controls, emphasizing that the fourth-quarter guidance could have been more optimistic without these restrictions. She also hinted at the possibility of Nvidia introducing new products in coordination with the U.S. government.
Data center revenue, inclusive of AI chips, reached $14.51 billion, surpassing the Street’s expectation of $12.82 billion. Gaming revenue stood at $2.86 billion for the quarter, exceeding analysts’ projections of $2.7 billion. The quarter saw impressive annual growth rates of 279% and 81% in these segments, respectively.
The latest report followed Nvidia’s record-high closing stock price of $504.09 on Monday. The stock experienced a marginal 0.9% decline on Tuesday ahead of the earnings release, aligning with broader market trends.
Notably, Nvidia has played a pivotal role in driving market momentum in 2023 as part of the “Magnificent Seven” stocks, alongside Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), and Tesla (TSLA). Together, these stocks have outpaced the remaining 493 stocks in the S&P 500, collectively gaining more than 70% through mid-November, compared to a 6% rise for the rest of the market.
Investors and industry observers are closely monitoring Nvidia’s performance, recognizing its potential to influence broader market trends and the continued impact of geopolitical factors on the tech giant’s global reach.
Source: Yahoo Finance
