Nvidia stock surges as AI helps graphics chipmaker smash earnings forecast
Artificial intelligence is driving a lot of new services from internet giants such as Amazon Web Services Inc., Google Inc., Facebook Inc. and Microsoft Corp. — and they all need Nvidia Corp.’s graphics chips to power AI in their massive data centers.
Once again, that’s what drove Nvidia’s growth in itsfiscal fourth quarter. The Santa Clara, California-based chipmaker today said its net profit shot up 71 percent from a year ago, to $1.1 billion, or $1.78 a share, up 80 percent. Revenues jumped 34 percent, to $2.91 billion.
That smashed Wall Street forecasts. Analysts had modeled a profit of $1.17 a share on revenue of $2.68 billion. Nvidia itself had forecast $2.6 billion to $2.7 billion in revenue.
“Nvidia had a stellar quarter with 34 percent revenue growth overall and growth in every business unit,” said Patrick Moorhead, president and principal analyst at Moor Insights & Strategy.
The company also issued a new forecast for the first quarter of $2.9 billion in revenue give or take 2 percent, well above the consensus of $2.46 billion, and a gross margin of 62.7 percent plus or minus a half-percentage point.
The results gave a huge lift to Nvidia’s shares. In after-hours trading, its shares were rising more than 11 percent. In regular trading, they had fallen more than 4 percent, to $219.07 a share, on a day when the overall markets again plunged, this time by about 4 percent or more than 1,000 points. Nvidia shares were up about 14 percent since the start of the year.
“Industries around the world are racing to incorporate AI,” Nvidia Chief Executive Jensen Huang (pictured) said in prepared remarks. “Virtually every internet and cloud service provider has embraced our Volta GPUs,” the company’s latest generation of graphics processing units.
Nvidia’s mainstay chips and systems for video gaming rose the most of any segment, up 29 percent from a year ago, to $1.739 billion.
But data center sales saw the biggest quarter-to-quarter rise, up 21 percent, to $606 million. That was up more than 105 percent from a year ago.
The big internet companies companies need the chips, which are especially adept at the kind of processing needed for machine learning algorithms, to power services such as image and speech recognition. They’re also critical for emerging technologies such as self-driving cars.
The growth signaled that the crucial data center segment is showing steadier momentum. In the second quarter, data center growth from the previous quarter had flagged to nearly flat, which Nvidia at the time blamed on a transition to a new generation of data center chips.
