Nvidia Stock Rises On A.I. Chips After Slight Beat

As the firm revealed slightly better revenue and net income for its fiscal fourth quarter than Wall Street anticipated, despite a year-over-year decline in both categories, Nvidia stock increased more than 8% in extended trading on Wednesday. The chipmaker performed as follows in comparison to Refinitiv consensus forecasts for the quarter that ended in January:

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• EPS: 88 cents, adjusted, compared to 81 cents expected
• Contrary to estimates, revenue came in at $6.05 billion.

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Net income per share for Nvidia was recorded at 57 cents. In its first quarter, Nvidia projected sales of $6.5 billion, which was higher than the $6.33 billion predicted by Wall Street.

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Nvidia has come to be regarded by investors as one of the chip firms best positioned to withstand a downturn in the economy that hits sales of PCs and semiconductors, despite the fact that both revenue and earnings were down from last year's $1.32 per share and $7.64 billion in sales.

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According to Nvidia's data center business, which sells AI processors, the company may continue to reap significant benefits from programs with artificial intelligence like ChatGPT and Microsoft Bing's AI chatbot. The graphics processors from Nvidia are excellent for running and training machine learning programs.

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Prior to the earnings announcement on Wednesday, the stock had increased by roughly 45%.

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The "inflection point" in AI, according to Nvidia CEO Jensen Huang, is driving companies of all sizes to purchase Nvidia chips in order to create machine learning software.

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The variety and power of generative AI, according to Huang, have made it urgent for businesses all around the world to create and implement AI plans.

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The data center segment of Nvidia's business accounts for the majority of its sales of GPUs for artificial intelligence. Revenue from data centers climbed 11% yearly to $3.62 billion. According to the business, U.S. cloud service providers increased their purchases as a result of expansion.

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With the recent spike in sales, a decline in gaming revenue was to be expected. Gamers were urged to replace their PCs with new graphics cards from businesses like Nvidia as a result of the Covid epidemic, but sales have substantially decreased in recent months.

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In particular, Nvidia reported fourth-quarter gaming revenue of $1.83 billion, a 46% decrease from the same period the previous year. The company said that the reduction was caused by the fact that it was selling fewer chips to partners due to their excessive inventories at the moment.

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However, Nvidia stated that throughout the quarter, fewer chips were shipped for game consoles, which is recorded under the gaming category. The Switch is powered by an Nvidia chip from Nintendo.

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Compared to the company's gaming and data center revenues, other areas including professional visualization and automotive chips continue to be considerably smaller. Automotive sales was $294 million, up 135% from the previous year, whereas Nvidia's professional visualization division for designers reported $226 million in revenue, a 65% yearly decline.