In a remarkable financial performance, Nvidia (NVDA) announced its third-quarter (Q3) earnings on Tuesday, outpacing Wall Street projections once again, fueled by the ongoing artificial intelligence (AI) boom that continues to drive demand for the company’s cutting-edge chips.
The chipmaker revealed adjusted earnings per share of $4.02 on revenue amounting to $18.12 billion, surpassing analyst expectations. According to Bloomberg data, the consensus among analysts had anticipated adjusted earnings per share to be $3.36 on revenue reaching $16.1 billion.
The third-quarter revenue demonstrated a substantial 34% increase from the preceding quarter and an impressive 206% surge from the corresponding period last year. This surge in revenue underscores the escalating demand for AI-related technologies, propelling Nvidia’s sales throughout the year 2023.
Moreover, the company’s revenue guidance for the current quarter surpassed estimates, projecting a figure of $20 billion, with a margin of error of plus or minus 2%. In contrast, analysts had forecasted a fourth-quarter guidance of $17.8 billion. Despite these positive indicators, Nvidia stock experienced a 3% decline on Wednesday following the Q3 earnings report.
At the time of this publication, NVIDIA Corp stock (NVDA) has witnessed a decline.
NVIDIA Corp
Current Price: $483.29
Change : -16.16
Change (%): (-3.23%)
Volume: 45.4M
Source: Tomorrow Events Market Data
CEO Jensen Huang attributed the robust growth to the industry’s transition from general-purpose to accelerated computing and generative AI large language model startups. He emphasized that consumer internet companies and global cloud service providers are leading this transformation, with nations and regional cloud service providers gearing up to establish AI clouds to meet local demand.
However, the market response to the report remained relatively subdued, with Nvidia acknowledging that new restrictions on chip exports to China would impose a burden on its results. Nvidia CFO Colette Kress disclosed that sales to China and other affected destinations, subject to licensing requirements, had consistently contributed 20-25% of Data Center revenue in recent quarters.
Kress outlined the anticipated decline in sales to these destinations in the fourth quarter of fiscal 2024 due to the export restrictions. Despite this, she expressed confidence that the decline would be offset by strong growth in other regions. Kress also suggested the possibility of Nvidia launching new products in coordination with the U.S. government to navigate the impact of export controls in Asia.
In terms of segment performance, the chipmaker reported data center revenue, including its AI chips, at $14.51 billion, surpassing the Street’s expectation of $12.82 billion. Nvidia’s gaming revenue for the quarter came in at $2.86 billion, exceeding the projected $2.7 billion by analysts. Notably, these segments demonstrated annual growth rates of 279% and 81%, respectively, during the quarter.
This financial update followed Nvidia’s record-high closing stock price of $504.09 per share on Monday. The stock experienced a marginal 0.9% dip on Tuesday ahead of the earnings release, aligning with broader market trends.
Nvidia has been a key player in driving market momentum throughout the year, forming part of the “Magnificent Seven” stocks alongside industry giants like Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), and Tesla (TSLA). Collectively, these stocks have witnessed a remarkable 70% surge in value through mid-November, dwarfing the 6% rise observed in the remaining 493 stocks in the S&P 500.
This latest financial report from Nvidia not only underscores its pivotal role in the tech landscape but also raises expectations for its future contributions to the broader market. The company’s ability to navigate geopolitical challenges and sustain its impressive growth trajectory will undoubtedly be closely monitored by investors and industry observers alike.
Source: Yahoo Finance
