Nvidia (NVDA) earnings This autumn 2023

Nvidia Corp CEO Jensen Huang holds one of the company’s new RTX 4090 chips for computer games in this undated handout photo posted on September 20, 2022.

Nvidia Corp. | via Reuters

NVIDIA Shares rose more than 8% in extended trading on Wednesday after the company reported slightly higher year-over-year sales and net earnings than Wall Street was expecting, despite a decline in both categories. Here’s how the chipmaker compared to Refinitiv’s consensus expectations for the quarter ended January:

  • ENV: $0.88 adjusted vs. $0.81 expectations
  • revenue: $6.05 billion versus expectations of $6.00 billion

Nvidia reported GAAP net earnings per share of $0.57. Nvidia is forecasting revenue of $6.5 billion for the first quarter, ahead of the $6.33 billion expected by Wall Street.

Though both revenue and earnings are down from last year’s $1.32 per share and $7.64 billion in revenue, Nvidia is increasingly being viewed by investors as one of the best-positioned chip stocks is to weather an economic slowdown that hurts PC and semiconductor sales.

Nvidia’s data center business, which includes chips for AI, continued to grow and indicated it could continue to benefit heavily from artificial intelligence software like ChatGPT and Microsoft Bing’s AI chatbot. Nvidia GPUs are good for training and running machine learning software.

The stock is up about 45% in 2023 ahead of Wednesday’s earnings report.

Nvidia CEO Jensen Huang, speaking to analysts, said AI is at a “tipping point,” pushing companies of all sizes to buy Nvidia chips to build machine learning software.

“The versatility and power of generative AI has created a sense of urgency among companies around the world to develop and deploy AI strategies,” said Huang.

Most of Nvidia’s sales of artificial intelligence GPUs fall into the company’s data center category. Data center revenue grew 11% annually to $3.62 billion. The company said the growth was due to US cloud service providers buying more products.

Gaming revenue has been on the decline, as expected, as sales have soared in recent years. The pandemic encouraged gamers to upgrade their systems with new graphics cards from companies like Nvidia, but sales fell significantly over the past year.

Notably, Nvidia reported $1.83 billion in gaming revenue in the fourth quarter, down 46% from the prior-year period. The company said the drop is because it’s selling fewer chips to partners because they currently have too much inventory.

Nvidia also said it shipped fewer gaming console chips in the quarter, which is reported in the gaming category. Nintendo uses an Nvidia chip to power the Switch.

Other categories like professional visualization and automotive chips remain much smaller than the company’s gaming and data center businesses. Nvidia’s professional visualization business for designers posted sales of $226 million, down 65% annually, and automotive sales were $294 million, up 135% year over year.

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