Chip giant meets Wall Street expectations, despite games revenue down 46%

Graphics card giant Nvidia (NVDA) announced its fourth-quarter results after the bell on Wednesday, beating analysts’ estimates for revenue and profit despite a 46% year-over-year decline in gaming revenue.

Better still for Nvidia, the company says it expects first-quarter revenue of $6.5 billion, compared to Wall Street’s $6.35 billion.

Nvidia shares rose more than 6% immediately after the report.

Here are the most important numbers from the report compared to what Wall Street expected from the company, as compiled by Bloomberg.

  • Income: $6.05 billion vs $6.02 billion expected

  • Adjusted EPS: $0.88 vs $0.81 expected

  • Data Center Revenue: $3.62 billion vs $3.87 billion expected

  • Games : $1.83 billion vs $1.6 billion expected

  • Professional visualization: $226 million vs $195 million planned

  • Auto and robotics: $294 million vs $267 million planned

“AI is at an inflection point, gearing up for broad adoption across industries,” Nvidia CEO Jensen Huang said in a statement. “From startups to large enterprises, we are seeing accelerated interest in the versatility and capabilities of generative AI.

Wall Street believes Nvidia has a new opportunity for potential growth with the new explosion of interest in generative AI platforms such as OpenAI’s ChatGPT, Microsoft’s Bing (MSFT) and Google’s Bard (GOOG, GOOGL ). Artificial intelligence platforms require huge amounts of processing power and Nvidia’s graphics cards are well suited for such applications.

Nvidia’s AI-powered data center revenue fell from $968 million in the fourth quarter of 2019 to $3.62 billion in the last quarter.

Nvidia Corp CEO Jensen Huang holds one of the company's new RTX 4090 chips for computer games in this undated photo provided September 20, 2022. Courtesy Nvidia Corp/Handout via REUTERS AT L 'ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY THIRD PERSON

Nvidia Corp CEO Jensen Huang holds one of the company’s new RTX 4090 chips for computer games in this undated photo provided September 20, 2022. (Image: Nvidia)

But the chipmaker, like the rest of the gaming industry, has also had to deal with a drop in sales compared to the same period last year, when gamers were clamoring for new hardware and software towards the end of the pandemic era. In the third quarter, revenue from the company’s games business plummeted 51% year-over-year.

The pandemic has sent gamers in search of graphics cards and computers running Nvidia hardware so they can play big-name titles like “Call of Duty,” “Fortnite,” and “Roblox.” Now that they have this hardware, they don’t need to upgrade, which is skyrocketing Nvidia’s gaming revenue.

“The game is recovering from the post-pandemic downturn, with gamers enthusiastically adopting the new Ada-architecture GPUs with neural AI rendering,” Huang said.

Pull out the pandemic era, though, and look at the company’s earnings in the fourth quarter of February 2020 and gaming revenue was $1.5 billion. The year before? Only $954 million. In other words, the gaming segment is correcting the unsustainable growth it has experienced during the pandemic.

Sign up for the Yahoo Finance technical newsletter.

Sign up for the Yahoo Finance technical newsletter.

More Dan

Do you have any advice? Email Daniel Howley at Follow him on Twitter at @DanielHowley.

For the latest earnings reports and analysis, earnings whispers and expectations, and corporate earnings news, click here

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app to Apple Or android

Leave a Comment