Nvidia issued a sales forecast for the July quarter that was well above expectations and pointed to the increasing demand for its chips, which enable artificial intelligence applications.
Its shares rose sharply in after-hours trading.
According to FactSet, the semiconductor company reported adjusted earnings per share of $1.09 in the April quarter, compared to Wall Street’s consensus estimate of 92 cents. Revenue came in at $7.2 billion, beating analysts’ expectations of $6.5 billion. For the quarter, gaming revenue fell 38% year over year, but data center revenue rose 14% thanks to demand from AI.
The big news was the view. For the current quarter, Nvidia gave a mid-term revenue guidance of $11 billion, well above the analyst consensus of $7.2 billion.
Nvidia shares rose as much as 24% to $378 after the release.
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“The computing industry is undergoing two simultaneous changes – accelerated computing and generative AI,” Nvidia CEO Jensen Huang said in the release. “Our entire family of data center products – H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand and BlueField-3 DPU – are in production. We are significantly increasing our supply to meet the increasing demand.”
These products are used to power the latest artificial intelligence applications that have captivated both investors and consumers.
Nvidia is a leading manufacturer of chips for video games, artificial intelligence and cloud computing applications in PC and server hardware.
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The company’s chips are highly exposed to generative AI, which is trending this year. Technology brutally captures text, images, and video to create content. Interest in this form of AI was sparked by OpenAI’s release of ChatGPT late last year.
In a conference call with investors and analysts, Nvidia’s management said it saw broad demand for generative AI projects from cloud computing providers, big consumer internet companies, startups and enterprises. The company also said it had secured “significantly larger” delivery commitments from its suppliers for the second half of its fiscal year to meet higher demand compared to the first half.
In a phone interview with Barron’s after the call, CFO Colette Kress said order visibility improved during the quarter. Customers are submitting their longer-term plans to Nvidia for building new data centers, she said.
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Wall Street analysts see Nvidia positively. According to FactSet, about 74% of respondents have a buy or equivalent rating on the stock.
Nvidia stock is up more than 100% so far this year and about 90% over the past 12 months.
Write to Tae Kim at [email protected]