Nvidia shares rise on strong quarterly results

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Nvidia Corp’s shares up shot up by as much as 12 percent in extended trading on Thursday as demand surged for its graphics chips used in data centers, gaming devices and cryptocurrency mining.

“One growth driver after another just keeps on coming,” Nvidia’s chief executive officer Jensen Huang was quoted as saying in an interview. “Maybe that’s the reason why we’re surprising people year in and year out.”

In particular, the California-based company, which also reported better-than-expected quarterly results, is reaping the benefits from the launch of its Volta chip architecture last year. Volta processors power a range of technologies such as artificial intelligence and driverless cars.

“Virtually every Internet and cloud service provider has embraced our Volta GPUs,” Huang said in a statement.

Graphic chips were initially developed to handle graphics for high end video games and other computers. These chips help share the processing load from the main chip, making it easier and faster to run high end applications.

These chips are now being widely used in new technologies, like artificial intelligence and machine learning.

Revenue from Nvidia’s widely watched data center business, which counts Microsoft Corp’s Azure cloud business as its customer, more than doubled to 606 million US dollars.

That trounced analysts’ average estimate of 541.1 million dollars.

Nvidia also sells chips to Amazon.com Inc’s Amazon Web Services (AWS), which is dueling with Microsoft to handle data and computing for large enterprises.

Data center should continue to grow pretty nicely into calendar 2018 and beyond, Morningstar analyst Abhinav Davuluri said.

The boom in cryptocurrencies is also powering demand for chips from Nvidia and rival AMD as they provide the high computing ability required for cryptocurrency “mining.”

“Strong demand in the cryptocurrency market exceeded our expectations,” chief financial officer Colette Kress said on a conference call.

“While the overall contribution of cryptocurrency to our business remains difficult to quantify, we believe it was a higher percentage of revenue than the prior quarter.”

The company said inventory levels of its gaming GPUs throughout the quarter were lower than historical channel inventory levels due to surging demand from cryptocurrency miners.

The price of Bitcoin, the most popular cryptocurrency, rose more than 1,300 percent in 2017. Prices have, however, dropped about 40 percent this year.

Reuters Photo

Nvidia’s revenue from gaming, for which it is best known, rose 29 percent to 1.74 billion US dollars, accounting for more than half of its total revenue in the fourth quarter, and also beating analysts’ estimate of 1.59 billion dollars.

The company forecast current-quarter revenue of 2.90 billion dollars, plus or minus 2 percent, well above the analysts’ average estimate of 2.47 billion dollars, according to Thomson Reuters I/B/E/S.

Net income rose to 1.12 billion US dollars, or 1.78 dollars per share, in the fourth quarter ended Jan. 28 from 655 million dollars, or 99 cents per share, a year earlier.

Results include a 133 million dollars gain related to the new US tax law.

Total revenue rose 34 percent to 2.91 billion dollars, topping estimate of 2.69 billion dollars.

Excluding items, the company said it earned 1.72 dollars per share.

Nvidia earned 1.57 dollars per share, excluding the tax benefit, according to Thomson Reuters I/B/E/S, beating estimate of 1.17 dollars.

The company’s shares were trading at 233 dollars in extended trading. They have surged about 83 percent in the past 12 months.

Source(s): Reuters