Nvidia’s earnings beat revenue expectations, but fell short of bottom line

Graphics chip giant Nvidia (NVDA) reported third-quarter results after the closing bell on Wednesday, beating analysts’ revenue expectations but falling short on earnings per share.

Here are the most important numbers from the report, compared to what Wall Street was looking for, as compiled by Bloomberg.

  • Revenue: $5.93 billion vs $5.79 billion expected

  • Adjusted EPS: $0.58 vs $0.70 expected

  • Gaming revenue: $1.57 billion vs $1.32 billion expected

  • Data Center Revenue: $3.83 billion vs $3.7 billion expected

Nvidia’s revenue forecast for the fourth quarter was just below Wall Street expectations, coming in at $6 billion. Analysts were hoping for $6.09 billion.

Nvidia shares rose about 2% after the report.

Data center revenue jumped about 31% year-over-year in the quarter, but gaming revenue slumped 51% year-over-year

Chip stocks have been hammered this year as consumer and business demand for electronics has waned following the explosive growth the industry has experienced during the pandemic. Consumers don’t need as many computers, having bought them during the shutdowns, and companies already have plenty of machines for their remote and hybrid workers.

Nvidia CEO Jensen Huang makes a point during his keynote address at CES in Las Vegas, Nevada, U.S. January 7, 2018. REUTERS/Rick Wilking

Nvidia cut chip production in the second quarter, with CEO Jensen Huang telling investors the company is working to realign inventory with customer demand for chips.

Nvidia’s graphics chips were in such demand during the pandemic that they were selling for hundreds of dollars above their retail prices. But with consumers returning to their pre-pandemic lives, demand for chips has waned and prices have fallen to normal levels.

Nvidia is also working to ensure it can still sell its premium products in China. Nvidia began shipping its new A800 chip in the country during the third quarter as a replacement for the A100 chip, which the US government said was too powerful to ship to China. The government fears that China will use the technology for military applications.

Ahead of its earnings on Wednesday, Nvidia announced a partnership with Microsoft (MSFT) to build one of the world’s most powerful AI supercomputers using chips from Nvidia and Microsoft’s Azure infrastructure. The computer is designed to help train large-scale AI systems.

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