What happened
Shares of Nvidia (NVDA 5.08%) fell out of hours on Thursday as investors responded to the lower-than-expected chip maker’s guidance. At 6:40 pm ET, Nvidia’s stock price fell more than 6% after rising 5% earlier in the day.
And what
Nvidia’s revenue soared 46% year-over-year to $ 8.29 billion in its third fiscal quarter of 2023, which ended May 1. This impressive growth was driven by an 83% increase in data center sales, to $ 3.75 billion, and a 31% increase in gaming. revenue, to $ 3.62 billion.
“We have yielded record results in Data Center and Gaming in the context of a challenging macro environment,” founder and CEO Jensen Huang said in a press release. “The effectiveness of deep learning to automate intelligence is driving companies across the industry to adopt Nvidia for artificial intelligence computing.”
Nvidia’s data center business is booming. Image source: Getty Images.
Despite supply chain disruptions that have affected the technology sector, Nvidia has been able to manage its costs effectively. Its adjusted gross margin actually increased by 90 basis points (1 basis point equals 0.01%) to 67.1%. This, combined with Nvidia’s strong sales growth, helped its adjusted operating revenue grow 55% to $ 3.96 million. Its adjusted earnings per share, in turn, rose 49% to $ 1.36.
Now that
Investors, however, seemed to focus more on Nvidia’s financial forecasts for its second fiscal quarter of 2023. Management directed revenue of approximately $ 8.1 billion, which was below Wall Street’s estimates. more than $ 8.5 billion.
Nvidia noted that the war in Europe and coronavirus-related blockages in China are likely to negatively affect its sales results by approximately $ 500 million. Still, Huang highlighted the company’s promising list of new offerings coming out later this year and remains optimistic that strong trends will continue to fuel Nvidia’s long-term expansion. He said:
We are gearing up for the biggest wave of new products in our history with new GPU, CPU, DPU and robotics processors expanding into the second half. Our new chips and systems will greatly advance AI, graphics, the Omniverse, autonomous cars, and robotics, as well as the many industries that are affected by these technologies.
Therefore, patient and long-term investors may want to use the sale as an opportunity to buy the shares of the technology leader at a discount.