Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Nvidia third-quarter revenue up on strong data center demand

Published 11/16/2022, 04:28 PM
Updated 11/16/2022, 07:52 PM
© Reuters. FILE PHOTO: The logo of technology company Nvidia is seen at its headquarters in Santa Clara, California February 11, 2015. REUTERS/Robert Galbraith/File Photo

© Reuters. FILE PHOTO: The logo of technology company Nvidia is seen at its headquarters in Santa Clara, California February 11, 2015. REUTERS/Robert Galbraith/File Photo

By Chavi Mehta and Jane Lanhee Lee

(Reuters) -Chip designer and computing firm Nvidia (NASDAQ:NVDA) Corp beat expectations for third-quarter revenue on Wednesday, thanks to strong demand in its data center business on the back of rising cloud adoption.

Data center revenue in the third quarter rose 31% from a year ago, while gaming revenue was down 51% from a year ago. Nvidia shares rose 1% in after-hours trading.

Cloud companies are increasingly using Nvidia chips in their systems. Microsoft Corp (NASDAQ:MSFT) is working with the company to build a "massive" computer to handle intense artificial intelligence computing work in the cloud.

As of August, Nvidia's market share of so-called accelerator chips inside the world's six biggest clouds' infrastructure grew to 85%, brokerage Jefferies said in a note in October.

While U.S. export restrictions have been a cause for worry, Nvidia's production of a downgraded iteration of the A100, called A800, which complies with recent export control rules, has been a bright spot as it helped lessen the financial blow.

And Nvidia Chief Financial Officer Colette Kress said while the export restrictions impacted third-quarter revenue, the decline was "largely offset by sales of alternative products into China."

"The export restriction put on by the U.S. Department of Commerce was a blessing for Nvidia as Chinese customers started to hoard its Datacenter GPUs," said Summit Insights Group analyst Kinngai Chan, who upgraded the stock to "buy" from "hold".

While the A800 chip meets the export regulations for China, asked if it also met the spirit of the regulations, Nvidia Chief Executive Jensen Huang said "it meets the clear test in letter and spirit".

There have been questions by chip industry executives on whether Nvidia had cleared the changes with the Commerce Department. Nvidia previously declined to comment on that issue.

Nvidia's gaming business, a segment that once drove its revenue, was hit by weak consumer demand, but also a change in the way Ethereum crypto currency is created.

"This may have contributed to increased after-market sales of our GPUs in certain markets, potentially impacting demand for some of our products, particularly in the low-end," Kress said.

Nvidia's GPU chips have been popular for mining crypto currencies but a crypto market rout is also hurting demand. CEO Huang said that going forward he does not expect blockchain to be an important part of the business.

© Reuters. FILE PHOTO: The logo of technology company Nvidia is seen at its headquarters in Santa Clara, California February 11, 2015. REUTERS/Robert Galbraith/File Photo

The company's adjusted revenue for the quarter ended Oct. 30 was $5.93 billion. Analysts on average had expected revenue of $5.77 billion, according to Refinitiv data.

Nvidia forecast current-quarter revenue at $6 billion, plus or minus 2%, versus expectation of $6.09 billion.

Latest comments

Its going up
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.