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Nvidia crushes market expectations in fiscal 1Q due to revenue from video gaming

Nvidia zipped past market expectations by posting earnings of US$1.88 per share on US$3.2bn in revenue
semiconductor chip
The chipmaker expects revenue of US$3.04bn to US$3.16bn in its fiscal second quarter

The chipmaker Nvidia (NASDAQ:NVDA) smashed market expectations by reporting a 66% jump in its fiscal first-quarter revenue largely on the strength of video gaming sales and profits from its data centers.

But investors sent its shares down in extended trade after its chief executive Jensen Huang said that as much as $289mln of its revenues came from cryptocurrency mining and that any profits made in this volatile arena would fall in the current fiscal quarter.

"Cryptominers bought a lot of our GPUs during the quarter, and it drove prices up. And I think that a lot of the gamers weren't able to buy into the new GeForces as a result," Huang said in a conference call. "And so we're starting to see the prices come down. ... The prices are starting to normalize."

Revenue from its data center group – which is helped by business from cloud computing specialists like Amazon and Microsoft - shot up 71% in the quarter to US$701m while its revenue from gaming climbed 68% to US$1.72bln. On the gaming front, Nvidia introduced Nvidia RTZ, a computer graphics program that produces movie-quality images in real time in the quarter.

On a broader basis, Nvidia posted earnings of US$1.88 per share on revenue of US$3.2bln, zipping past Wall Street’s expectations of US$1.47 per share on revenue of US$2.9bln.

READ: Tesla and Nvidia among the worst hit in Tuesday’s tech sell-off amid fresh concerns over driverless cars

Jensen Huang, Nvidia’s founder and chief executive, pointed to artificial intelligence as the source of profits going forward.

“At the heart of our opportunity is the incredible growth of computing demand of AI, just as traditional computing has slowed,” he said. “We had a strong quarter with growth across every platform. Our datacenter business achieved another record and gaming remained strong.”

Revenue from Nvidia's automotive group - the company supplies its chips to autonomous carmakers but also has a fleet of its own driverless cars – grew 4 percent from a year earlier to $145mln.

Nvidia now expects to earn revenue of between US$3.04bn to US$3.16bin in the fiscal second quarter, which beats the consensus estimate of US$2.96bln.

In pre-market trade, Nvidia shares shed 2% to US$254.48.

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