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Nvidia shares surge premarket after fourth quarter numbers surprise the market

CEO Jensen Huang believes the really big revenue from automotive will start in 2019-2020, when auto makers, startups, taxi companies, ride-hailing companies and others start to order self-driving capabilities in their vehicles
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The improved results were due to greater demand for its core product – graphics chips.

Nvidia Corp. (NASDAQ:NVDA) saw its shares surge in premarket deals after analysts upgraded their stance on the stock following its impressive full year and fourth quarter numbers.

The improved results were due to greater demand for its core product – graphics chips. 

READ: Nvidia unveils AI partnership with Uber at CES 2018

The chip maker reported fourth-quarter net income of US$1.12bn, or US$1.78 a share, compared with US$655mln, or 99 US cents a share, a year ago.

Adjusted earnings stood at US$1.72 a share, coming in above market expectations for US$1.16 a share.

During the quarter, revenue rose to US$2.91bn from US$2.17bn from last year, against Wall Street’s consensus of US$2.68bn.

Gaming revenue rose 29% to US$1.74bn against market expectations for a 14% growth to US$1.54bn, year on year.

Data-center revenue surged by 105% to US$606mln, soundly beating market expectations for an 85% growth to US$548.1mln.

READ: Nvidia dips as Elon Musk hints Tesla could drop chipmaker’s technology from its electric cars

The only laggard was in the automotive business which saw a growth of less than 15% for the full year.

Chief Financial Officer Colette Kress said on Thursday: “The sequential decline reflects our transition from infotainment, which is becoming commoditized, to next-generation AI cockpit systems and complete top-to-bottom self-driving-vehicle platforms built on Nvidia hardware and software,” Kress said.

The Xavier processor, a chip with 9 billion transistors that Nvidia calls the most complex system-on-a-chip ever created, is expected to eventually drive its automotive business.

Nvidia Chief Executive Jensen Huang added that he believes the really big revenue from automotive will begin in about 2019 to 2020, when auto makers, startups, taxi companies, ride-hailing companies and others begin to order self-driving capabilities in their vehicles and fleets.

READ: Nvidia heads higher as it strikes supply deals with several Chinese computing giants

Huang said the brains for self-driving cars will sell for an average of about US$500 to US$1,000, while those for autonomous ride-hailing vehicles, will command several thousand dollars each.

In premarket trade, its shares were up 9.65% at US$238.50.



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