Published - November 17, 2022 @ 12:41 PM (EET)
Chip designer and computing firm Nvidia (NASDAQ:NVDA) assured investors on Wednesday that demand for its artificial intelligence and data-center chips remains strong, even as the company continues to struggle with a slowdown in the personal-computers market.
For its third quarter, Nvidia reported earnings that beat analysts' expectations, with data center revenue increasing 31% from a year ago to $3.83 billion. Nvidia attributed the growth to sales to US cloud service providers and consumer internet companies.
While still down 17% to $5.93 billion in the fiscal third quarter, revenue came in better than the consensus estimate of $5.8 billion.
Meanwhile, Nvidia's gaming business, a segment that once drove its revenue, was down 51% to $1.57 billion from a year ago, hit by weak consumer spending.
Although some of its smaller segments, the company's automotive division posted an 86% jump in sales, bringing in $251 million in the quarter, while Professional visualization shrunk 65% on an annual basis to $200 million.
WHY IT MATTERS
In August, Nvidia warned that the company is being affected by new US export control that impacts its most advanced chips geared toward artificial intelligence.
Despite the challenges, Chief Financial Officer Colette Kress said while the export restrictions impacted third-quarter revenue, the decline was "largely offset by sales of alternative products into China."
Net profit was $680 million, and looking ahead, Nividia forecasts current-quarter revenue at $6 billion, compared to Wall Street projections of around $6.1 billion.
"We are quickly adapting to the macro environment, correcting inventory levels, and paving the way for new products,"
said Chief Executive Jensen Huang in a statement.
Due to an inventory charge, gross margin for the third quarter was down 11.6 percentage points to 53.6%. However, Nvidia expects gross margin for the current quarter to recover to between 63.2% and 66%.
The company's shares which had closed down 4.54% Wednesday before the results, rose about 3% in after-hours trading.
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