Nvidia (NVDA) unveiled its third-quarter earnings after the closing bell on Tuesday, surpassing Wall Street predictions once again, buoyed by the ongoing surge in demand for the company’s chips driven by the artificial intelligence boom.
The chipmaker reported adjusted earnings per share of $4.02 on revenue amounting to $18.12 billion, exceeding analyst expectations. According to Bloomberg data, analysts had anticipated adjusted earnings per share to be $3.36, with revenue reaching $16.1 billion.
Third-quarter revenue experienced a remarkable 34% increase from the preceding quarter and an outstanding 206% surge compared to the same period last year, underscoring the sustained high demand for AI, propelling the company’s sales throughout 2023.
Furthermore, the company’s revenue guidance for the ongoing quarter exceeded estimates, projecting $20 billion, with a margin of plus or minus 2%. Analysts had initially forecasted fourth-quarter guidance of $17.8 billion.
Nvidia CEO Jensen Huang, during the earnings call on Tuesday night, attributed the robust growth to the industry’s widespread shift from general-purpose to accelerated computing and the rise of generative AI large language model startups.
He noted that consumer internet companies and global cloud service providers are at the forefront of this transition, with the next waves beginning to take shape, as nations and regional cloud service providers build AI clouds to cater to local demands.
However, the reaction from the stock market was muted as the company acknowledged that new restrictions on chip exports to China would impact its results. Post the announcement, Nvidia’s shares experienced a slight dip of over 1% in after-hours trading on Tuesday night.
Nvidia CFO Colette Kress, in a release, highlighted the impact of the export restrictions, stating that sales to China and other affected destinations, constituting approximately 20-25% of Data Center revenue over recent quarters, were now subject to licensing requirements. Kress anticipated a significant decline in sales to these destinations in the fourth quarter of fiscal 2024. Nevertheless, she expressed confidence that the decline would be outweighed by robust growth in other regions.
During the investor address on Tuesday night, Kress elaborated on the export restrictions to Asia, stating that the fourth-quarter guidance might have been more optimistic if not for the constraints. She also hinted at the potential launch of new products in coordination with the U.S. government to mitigate the negative effects of export controls on the company’s China business.
Breaking down the revenue, the chipmaker reported data center revenue, encompassing its AI chips, at $14.51 billion, surpassing the Street’s expectation of $12.82 billion. Nvidia’s gaming revenue for the quarter amounted to $2.86 billion, also exceeding analysts’ projections of $2.7 billion. Both segments exhibited substantial annual growth of 279% and 81%, respectively, for the quarter.
