Nvidia Corp. shares ticked higher within the prolonged session Wednesday after the chip maker’s modified servers to China mostly made up for an expected $400 million exposure to a U.S. ban on certain tech sales.
Nvidia
NVDA,
-4.54%
shares rose 2% after hours, following a 4.5% decline within the regular session to shut at $159.10.
Nvidia reported third-quarter net income of $680 million, or 27 cents a share, compared with $2.46 billion, or 97 cents a share, within the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were 58 cents a share, compared with $1.17 a share within the year-ago period.
Revenue fell to $5.93 billion from $7.1 billion within the year-ago quarter as gaming sales slumped. Analysts had forecast 71 cents a share on revenue of $5.78 billion.
Data-center sales rose 31% to $3.83 billion, compared with Advanced Micro Devices Inc. ‘s
AMD,
-4.81%
45% rise in data-center sales to $1.6 billion, and Intel’s
INTC,
-3.84%
27% drop to $4.2 billion. Analysts had forecast Nvidia data-center sales of $3.72 billion.
Nvidia’s gaming sales dropped 51% to $1.57 billion from a 12 months ago. Analysts had forecast $1.42 billion in gaming sales.
“We’re quickly adapting to the macro environment, correcting inventory levels and paving the way in which for brand spanking new products,” said Jensen Huang, Nvidia’s founder and chief executive, in an announcement. Last quarter, the corporate announced it took a $1.32 billion inventory charge.
In late August, Nvidia had forecast third-quarter sales between $5.78 billion and $6.02 billion, which fell about $1 billion below what the Street was expecting on the time. That was before it estimated a possible $400 million in lost China sales, that Nvidia hopes to correct by selling a version of its A100 data-center chip called the A800 to China, which inhibits AI and supercomputing use and thus meets U.S. restrictions on the market.
“These restrictions impacted third-quarter revenue largely offset by sales of other products into China,” said Colette Kress, Nvidia’s chief financial officer, on the decision with analysts. “That said, demand in China more broadly stays soft. We expect that to proceed in the present quarter.”
Read: Nvidia’s gambit to salvage China data-center sales, gaming-card market questioned heading into earnings
Kress said that the corporate began shipping its H100 data center product within the third quarter, and that base systems from Dell Technologies Inc.
DELL,
-2.76%,
Hewlett-Packard Enterprise Co.
HPE,
-1.81%,
Lenovo
992,
-1.03%,
and Super Micro Computer Inc .
SMCI,
-5.43%
starting this month.
“Early next 12 months the primary H100 base cloud instances might be available on Amazon
AMZN,
-1.84%
Web Services local cloud, Microsoft
MSFT,
+0.18%
Azure, and Oracle
ORCL,
+0.90%
cloud infrastructure,” Kress said.
For the fourth quarter, Nvidia forecast revenue of $5.88 billion to $6.12 billion, while analysts surveyed by FactSet, on average, have forecast earnings of 76 cents a share on revenue of $6.07 billion.
PC sales are seeing their steepest decline since data began being collected within the Nineties after a two-year surge, and spending on videogames and kit for them has also come back to earth. At the identical time, drops in cryptocurrency prices have made crypto mining less profitable; Nvidia cards have been used extensively to mine for Ethereum
ETHUSD,
+1.09%
and other digital assets.
Nvidia has been slashing its outlook al 12 months, sometimes twice with 1 / 4.
Earlier in August, Nvidia warned of a $1.4 billion revenue shortfall due to weak gaming sales. That was on top of the $500 million Nvidia pulled from its second-quarter revenue forecast due to the COVID lockdowns in China and the war in Ukraine.
Following that, analysts readjusted their estimates, selecting a consensus of $5.78 billion for the quarter, coming very near the $5.57 billion AMD reported for its third quarter. The last time AMD topped Nvidia in quarterly revenue was the third quarter of 2014, when AMD reported sales of $1.43 billion and Nvidia reported $1.23 billion, in keeping with FactSet data.
Over the 12 months, Nvidia shares have dropped 46%. Compared, the PHLX Semiconductor Index
SOX,
-4.26%
is down 32% 12 months so far, the S&P 500 index
SPX,
-0.83%
is down 17%, and the Nasdaq Composite Index
COMP,
-10.23%
is off 29%.
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