Shares of Nvidia Corp. edged higher in extended trading on Wednesday after the chipmaker was expected to be hit by a U.S. ban on the sale of certain technology to China that did not deter it beat Wall Street’s revenue estimates.
Nvidia
NVDA,
shares were up 2% in hours, after falling 4.5% in the regular trading session, to close at $159.10.
Nvidia reported third-quarter net income of $680 million, or 27 cents a share, compared with $2.46 billion, or 97 cents a share, for the same period last year. Adjusted earnings, excluding stock-based compensation and other expenses, were 58 cents a share, compared with $1.17 a share for the year-ago period.
Revenue fell to $5.93 billion from $7.1 billion in the previous quarter due to a slump in game sales. Analysts had forecast 71 cents a share on revenue of $5.78 billion.
Data center revenue grew 31% to $3.83 billion, while gaming revenue fell 51% to $1.57 billion from a year ago. Analysts had forecast $1.42 billion in gaming revenue and $3.72 billion in data center revenue.
“We are rapidly adapting to the macro environment, adjusting inventory levels and paving the way for new products,” said Jensen Huang, founder and chief executive officer of Nvidia. Last quarter, the company announced that it had to pay $1.32 billion in inventory fees.
At the end of August, Nvidia has forecast third-quarter revenue from $5.78 billion to $6.02 billion, down about $1 billion to under what the Street was expecting at the time. That was before it estimated possible $400 million in lost sales in Chinawhich Nvidia hopes to fix by selling a version of the A100 data center chip called the A800 to China, which prevents the use of AI and supercomputers and thus meeting US restrictions for sale.
“These restrictions hit third-quarter revenue, with the decline largely offset by sales of alternative products into China,” said Colette Kress, chief financial officer at Nvidia.
Read: Nvidia’s gamble to salvage China data center sales, gaming card market questioned earnings
For the fourth quarter, Nvidia forecast revenue of $5.88 billion to $6.12 billion, while analysts surveyed by FactSet on average had forecast earnings of 76 cents a share on revenue. is $6.07 billion.
PC sales are seeing the sharpest decline since data started to be collected in the 1990s after two years of spikes and spending on video games and their devices has also returned to earth. At the same time, falling cryptocurrency prices have made crypto mining less profitable; Nvidia cards have been widely used for Ethereum mining
ETHUSD,
and other digital assets.
Nvidia cut its outlook for the whole year, sometimes twice in a quarter.
Early August, Nvidia warns of $1.4 billion revenue shortfall because of weak game sales. That is over $500 million Nvidia pulls from second-quarter revenue forecast because of the blockade due to COVID in China and the war in Ukraine.
The analysts then revised their estimates, reaching a consensus of $5.78 billion for the upcoming, quarter. very close to 5.57 billion dollars Advanced Micro Devices Inc.
AMD,
reported for its third quarter. The last time AMD overtook Nvidia in quarterly revenue was in the third quarter of 2014, when AMD reported $1.43 billion in revenue and Nvidia reported $1.23 billion, according to FactSet data.
Over the past year, Nvidia shares have fallen 46%. For comparison, the PHLX Semiconductor Index
NUMBER X,
down 32% year-to-date, S&P 500
SPX,
down 17% and the Nasdaq Composite Index
COMPUTER,
down 29%.
