Earnings Results

Nvidia sets new earnings records and projects more to come, but its stock still dips

Company sets new quarterly revenue record of more than $18 billion

Nvidia reported its fiscal third-quarter results Tuesday.

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Nvidia Corp. easily topped revenue and earnings expectations for the latest quarter Tuesday, setting a new top-line record of $18 billion in the process.

The company also forecast revenue of $20 billion at the midpoint for the ongoing quarter, above the $18 billion consensus view but in line with what some analysts had been expecting heading into the report.

Nvidia shares NVDA, +1.95% leaned 1.7% lower in after-hours trading following the earnings call, as analysts had pointed to high expectations coming into the report. The options market, though, was prepared for a wider swing.

Revenue soared to $18.1 billion from $5.9 billion a year ago, while the FactSet consensus was for $16.2 billion. Nvidia’s sales for the quarter easily set a new record, surpassing the $13.5 billion in revenue that Nvidia posted for its fiscal second quarter.?

Nvidia’s data-center business saw revenue climb 279% from a year earlier to reach a record $14.5 billion and crush the FactSet consensus of $13.0 billion. This business has seen surging demand in the artificial-intelligence era, as companies leverage the company’s hardware in the training of AI models.?

More: Nvidia just ended an earnings recession and is helping to reshape corporate profits

Heading into the report, analysts were already looking well beyond the quarter and wondering if the company would provide commentary on the trajectory into 2025, as there’s been some concern on Wall Street that customers eventually will have to digest all their purchases.

“We absolutely believe that data center can grow through 2025,” Chief Executive Jensen Huang said on the earnings call. He noted that the company’s supply is improving, and it’s also benefiting from growing customer adoption in more regions.

Also read: Opinion:?Nvidia’s biggest risk to its outlook right now is China

Still, the company must contend with some near-term challenges. The U.S. recently instituted new export restrictions on the sale of some advanced chip technologies to China, rules that didn’t meaningfully impact Nvidia’s business in the latest quarter because of when the rules were put in place.

However, Nvidia’s sales to China and other impacted destinations derived from products now covered by the restrictions have made up about 20% to 25% of data-center revenue in recent quarters, Chief Financial Officer Colette Kress noted in prepared remarks.

“We expect that our sales to these destinations will decline significantly in the fourth quarter of fiscal 2024, though we believe the decline will be more than offset by strong growth in other regions,” she added.

Kress called out the expected negative China impact when speaking on Nvidia’s earnings call as well, saying the company does “not have good visibility into the magnitude of that impact even over the long term.”

For the fiscal third quarter, the company reported $2.9 billion in gaming revenue, while analysts were looking for $2.7 billion. Professional visualization revenue came in at $416 million, whereas analysts were modeling $391 million. Nvidia delivered $261 million in automotive revenue, compared with the $263 million FactSet consensus.

The company reported fiscal third-quarter net income of $9.2 billion, or $3.71 a share, compared with $680 million, or 27 cents a share, in the year-earlier period. On an adjusted basis, Nvidia earned $4.02 a share, up from 58 cents a share a year before, while the FactSet consensus was for $3.37 a share.?

Nvidia shares have gained about 240% so far this year, as the S&P 500 SPX has risen 18%.?