Nvidia crushes earnings forecasts, improves FQ3 revenue by 57 percent

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Nvidia is moving its GTC 2020 conference to an online-only format.
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Nvidia’s recently posted fiscal third-quarter financial results crushed Wall Street’s forecasts on revenue. It also improved its sales from the same time last year by 57 percent. The chipmaker’s earning triumph is due to massive growth in its gaming and data center segments.

Although the Santa Clara, California-based corporation expects those units to perform well in the fiscal fourth quarter, its roadmap is focused on artificial intelligence (AI).

Nvidia’s Outstanding FQ3 Earnings

In the September-ending period, Nvidia made $4.72 billion, a significant upgrade from its $3.01 billion quarterly intake last year. The firm’s outstanding gross income crushed market analysts’ consensus sales prediction of $3.96 billion. It also exceeded the high point of the guidance it offered in August by 5.37 percent.

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The lion’s share of the chipmaker’s FQ3 revenue came from its gaming segment, which generated $2.27 billion in sales. The division’s robust performance is unsurprising given the recent launch of its RTX 30 Series desktop graphics cards. CEO Jensen Huang praised the lineup’s incredible performance and described demand for the series as “overwhelming.”

Nvidia’s data center products also sold very well last quarter. The business made $1.90 billion for the corporation, an astounding 162 percent year-over-year increase, but only an 8 percent uptick sequentially. That result is somewhat deflating since the unit’s income outpaced its gaming revenue in FQ2 for the first time. That said, CFO Colette Kress warned investors the segment would produce “low-to-mid single-digit” growth this period.

In brighter news, the corporation recorded meaningful growth in its non-core businesses. Its personal visualization and automotive divisions saw annual surges in revenue of 16 and 13 percent, respectively.

Nvidia’s Sensible FQ4 Outlook

For FQ4, Nvidia anticipates taking in $4.80 billion, plus or minus 2 percent. If the firm manages to generate that much income, it will beat its sales from last year by 54.34 percent. It will also blow past Wall Street’s revenue projection of $4.42 billion by 8.59 percent.

With COVID-19 cases rising across the world, every corporation’s near-term earnings forecast should be taken with a grain of salt. Nvidia’s operations will be disrupted if local leaders call for another round of manufacturing shutdowns and travel restrictions. Outside of the pandemic’s unpredictable ongoing impact, the firm’s FQ4 outlook seems justified.

The corporation introduced a slew of new data center products and services in the September period. Even with diminished in end-market demand, the new offerings should bolster its income as 2020 wraps up. In addition, it should also see a nice spike in desktop graphics card purchases from holiday shoppers.

Nvidia’s Future is in Artificial Intelligence

Despite the blockbuster success of its core business, Nvidia focused its FQ3 earnings press release on AI.

Its chief executive highlighted the fact that his company offers the industry’s AI learning inference tools. The corporation noted its pending $40 billion acquisition of Arm would help it become a global leader in machine intelligence technology. The firm also touched on its intention to establish a state-of-the-art AI development center in Cambridge, England.

From reading the financial disclosure, Nvidia views AI as the future of its business and the world at large.

In the last year, the corporation laid the groundwork to make machine intelligence a fixture of 21st century living. At its 2020 GTC GPU Technology Conference, the chipmaker revealed its AI resources will optimize Microsoft, Amazon, and American Express’s services and operations. The firm touted its role in supporting the world’s faster supercomputer in developing new medicines and optimizing weather forecasts.

Nvidia also revealed its AI-enabled DRIVE platform would help Mercedes-Benz and Hyundai move closer to full vehicle autonomy.

Tech companies often characterized their offerings as having revolutionary potential. But Nvidia’s declarations do not seem like marketing puffery. Since it possesses immense financial and technological resources and even greater ambition, it might realize its global digital transformation plans.

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