Nvidia’s shares increased more than 8% on Wednesday in extended trading despite a decline in revenue and net income compared to the prior year.
Nvidia announced a GAAP net income per share of $0.57. Nvidia anticipated first-quarter sales of $6.5 billion, which was greater than the $6.33 billion anticipated by Wall Street.
Nvidia Data Center Business
Despite the fact that both revenue and earnings were lower than the prior year’s $1.32 per share and $7.64 billion in sales, investors increasingly view Nvidia as one of the chip stocks best positioned to withstand an economic slowdown that affects PC and semiconductor sales.
Here is how the chipmaker performed relative to the January-ending Refinitiv consensus estimate:
- EPS: $0.88, adjusted, versus expectations of $0.81
- Revenue: $6.05 billion compared to the expected $6.00 billion
AI chips continue to grow, showing that they may continue to benefit significantly from artificial intelligence software such as ChatGPT and Microsoft Bing’s AI chatbot. The graphics processors produced by Nvidia are ideal for training and operating machine learning algorithms.
Until Wednesday’s results report, the stock had risen over 45% in 2023.
On a conference call with analysts, the CEO of Nvidia, Jensen Huang, stated that artificial intelligence has reached a tipping point, compelling enterprises of all sizes to purchase Nvidia chips for the development of machine learning software.
According to Huang, the adaptability and potential of generative AI have sparked a sense of urgency among global businesses to design and implement AI plans.
The majority of GPUs for artificial intelligence sold by Nvidia are sold to data centers. Annual data center revenue climbed by 11% to $3.62 billion. U.S. cloud service providers purchased more products, according to the business.
Gaming Revenue Declines
As expected, sales have increased significantly during the past few years. The pandemic encouraged gamers to purchase new graphics cards from businesses such as Nvidia, but sales have fallen substantially over the past year.
Particularly, Nvidia reported $1.83 billion in gaming revenue for the fourth quarter, a 46% decline from the same period last year. The company attributed the reduction to the fact that it was selling fewer chips to its partners, who are already overstocked.
Moreover, Nvidia said that it shipped fewer chips for game consoles during the quarter, which falls under the category of gaming. Nvidia provides the processing power for the Switch.
Other sectors, such as professional visualization and automotive chips, are far less significant than the company’s gaming and data center industries.
The revenue of Nvidia’s professional visualization business for designers decreased by 65% annually to $226 million, while automotive revenue increased by 135% to $294 million.
Read more: Samsung’s Galaxy series face hurdles over ongoing difficulties with their screens and batteries
