Nvidia Continues to Exceed Wall Street Earnings Predictions, Adjusts China Growth Expectations

Nvidia (NVDA) reported Q3 earnings that topped Wall Street expectations again as the artificial intelligence boom has continued to fuel demand for the company’s chips. Adjusted earnings per share came in at $4.02 on revenue of $18.12 billion, beating analysts’ projections of $3.36 per share on $16.1 billion in revenue. Third-quarter revenue increased by 34% from the prior quarter and by 206% from the prior year, reflecting the rising demand for AI and boosting the company’s sales throughout 2023.

For the current quarter, Nvidia expects revenue of $20 billion, plus or minus 2%, outpacing analysts’ estimates of $17.8 billion. The market’s reaction to the report was muted, as the company warned that new restrictions on chip exports to China would impact results.

According to data from the company, sales to China and other affected destinations have contributed between 20-25% of Data Center revenue in recent quarters. Nvidia CFO Colette Kress expressed expectations for a significant decline in sales to these areas, while anticipating offsetting growth in other regions.

The chipmaker reported Data Center revenue of $14.51 billion, surpassing expectations of $12.82 billion, while gaming revenue totaled $2.86 billion, also higher than the projected $2.7 billion. Year-over-year growth for these segments were 279% and 81%, respectively.

Following these results, Nvidia’s stock was down approximately 1% after hours on Tuesday after closing at a record high of $504.09 per share. Earlier this year, the stock had seen remarkable movement following past earnings releases. In August, Nvidia’s stock soared to an all-time high after smashing second-quarter results and providing guidance that exceeded expectations.

The print could have significant implications for the overall market. Nvidia has been a key driver of momentum in the stock market and a member of the “Magnificent Seven” stocks. These stocks, including Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), and Tesla (TSLA), have outperformed the broader market this year by over 70%.

The report continued, noting that Nvidia’s stock has been a notable mover following earnings releases this year, with “affecting China’s reliance on chips due to export restrictions,” ultimately affecting the company’s stock prices. Analysts have advised that Nvidia’s stock may influence the stock market this year. Furthermore, the stock market has been affected significantly by Nvidia’s nearly 300% increase in its data center revenue according to Evercore ISI senior managing director Julian Emanuel. He also advised investors to be prepared for “post-NVDA volatility.”

Read the company’s official announcement here.


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