Nvidia Earnings Recover -- WSJ
By Asa Fitch
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 14, 2020).
Graphics chip-making giant Nvidia Corp. reported recovering
earnings, buttressed by strong gaming revenues and record sales to
big data centers that are using its hardware in artificial
The Santa Clara, Calif.-based company on Thursday said fiscal
fourth-quarter sales rose 41% to $3.11 billion. Adjusted earnings
per share more than doubled to $1.89, ending a streak of four
quarters of weaker year-over-year results.
The results bested Wall Street forecasts. Analysts expected
Nvidia to generate sales of $2.96 billion and $1.67 in adjusted
earnings per share, according to a FactSet survey.
Nvidia's shares rose more than 6% in after-hours trading.
The chip--maker gave a positive outlook for the current quarter,
which ends in April. Revenues are expected at $3 billion, above
what analysts had forecast.
The outbreak of the coronavirus in China, the company said, was
difficult to estimate. It resulted in a $100 million reduction to
expected sales in the current quarter, the company said. Nvidia
generated around 24% of sales last fiscal year in China, according
to regulatory filings.
Despite widespread concerns the virus could disrupt vital
Chinese supply chain links for tech companies, chip-makers so far
been relatively unscathed because their customers, including
computer manufacturers and electronic parts suppliers, typically
place orders months in advance. But the impact could start to be
felt this quarter, industry officials have said. Analysts at
Northland Securities on Tuesday predicted a 10% to 20%
quarter-on-quarter downturn in semiconductor demand, followed by a
slow recovery through the rest of the year.
Nvidia has recently benefited from growing interest in
artificial intelligence, another computational challenge where its
graphics processors excel. Big cloud-computing players like
Amazon.com Inc. and Alphabet Inc.'s Google unit use Nvidia chips to
satisfy their customers' demand for more AI computing power.
Nvidia has also long been a leading player in gaming, which
remains its largest revenue source. Nvidia chips are used in
Nintendo Co.'s Switch gaming consoles. Nintendo said it had sold
10.81 million Switch devices in the final three months of last
The company also has made a splash with a so-called ray-tracing
technology that facilitates more realistic depictions of light and
shadow in videogames. Early this month, Nvidia launched a
cloud-based gaming service called GeForce Now that allows gamers to
play their favorite titles, some with ray-tracing enabled, without
having a souped-up computer at home.
Nvidia said its gaming revenue rose 56% in the quarter to $1.49
billion, Nvidia said. Data center revenue rose 43% to $968 million.
Sales grew in all the company's other segments except for its
automotive business, which sells technologies used in autonomous
driving, where revenues were flat at $163 million.
The quarter's earnings jump partly reflected poor performance in
Nvidia's year-earlier period, when the company was grappling with a
slump in cryptocurrency markets. Nvidia's graphics processors are
well-suited to solving the complex mathematical calculations that
go into cryptocurrency mining, driving demand for the chips while
the market remained hot in 2018 but causing a lull when it softened
Write to Asa Fitch at firstname.lastname@example.org
(END) Dow Jones Newswires
February 14, 2020 02:47 ET (07:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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