Graphics processor maker Nvidia once again posted record sales this quarter amid very strong demand from the video game and data center sectors.
The top-ranked US processor company has just experienced a period of strong growth thanks to the pandemic that has fueled consumers’ appetite for video games and also thanks to the broader adoption of digital services that rely on data centers.
Nvidia said Wednesday that its third-quarter revenue jumped 50% to $7.1 billion, resulting in net income of $2.46 billion. The numbers beat Wall Street expectations, knowing that analysts polled by FactSet had forecast $6.8 billion in revenue and $2.27 billion in net income. The results were boosted by record video game sales of $3.2 billion, a 42% rebound over the previous year, and record sales in data centers, a 55% increase compared to the same period last year.
Shares of the Santa Clara-based California company fell 3.1 percent to $292.61. They recovered more than 3% in post-session quotes after these results were published.
The good results come amid a global shortage of semiconductors that has hampered the sale of a range of products, including gaming consoles and cars. Waiting time for certain types of processors has reached record levels and buyers tend to hoard. Pat Gelsinger, CEO of Intel, estimates that this shortage may continue into 2023.
Nvidia says it has worked to ensure long-term supply agreements are honored and, to that effect, made down payments of $1.64 billion to its suppliers in the third quarter. “We are very confident in our supply, especially from the second half of next year and beyond,” Nvidia CEO Jensen Huang emphasized at a staff analyst conference.
Nvidia Chief Financial Officer Colette Kress explained Wednesday that supply chain stresses plaguing automakers caused Nvidia vehicle sales to fall 11% from the second quarter, while keeping them 8% higher than the same period last year thanks to consumer interest in self-driving software. .
Mr. Huang also introduced the company to new markets, with the sale of auto processors increasing, with more and more being incorporated. This year, the company also announced that it will offer CPUs for data centers, competing directly with Intel.
Last year, Nvidia struck a deal to buy microprocessor company Arm Holdings for $40 billion, a move expected to further expand its reach. The deal is still awaiting regulatory approval and has drawn hostility from UK-based Arm customers. This week, the British government opened an investigation into the proposed acquisition, citing “serious competition concerns”.
The US Federal Trade Commission (FTC) has also expressed concerns about the deal. According to Ms. Chris, the company “is engaged in discussions with the Federal Trade Commission to find solutions to allay these concerns.” “
Nvidia defended the takeover bid and emphasized that it would not hinder the competition in any way. “We continue to believe in the merits and benefits of this acquisition,” said Ms. Chris.
China has also begun to study the deal, Nvidia announced.
Mr. Huang is now turning his attention to what is known as the Metaverse, a mysterious set of online universes where users who play as an avatar can roam and share immersive experiences with others. Nvidia offers a program called Omniverse Enterprise, which is a collaboration and simulation platform for creating, say, interactive avatars using artificial intelligence. The company offers these tools as basics for creating and connecting virtual worlds that customers can access by subscription. Mr. Huang explained that in his view, the reversal economy has greater potential than the current economy.
Huang argues that the metaverse will generate sales of software and hardware, some in the very short term. Digital avatars can be had with a subscription of $1,000 a year, he estimates, and the growth of the metaverse will spur demand for Nvidia chips. It is expected that revenue will likely be generated equally by sales of hardware and software licenses.
“It’s really going to be one of the biggest graphics opportunities we’ve ever seen,” he says.
Nvidia announced, Wednesday, November 17, that it expects revenue of $ 7.4 billion for the current quarter, exceeding expectations, with data centers growing faster than video games. Mr. Huang stresses that data centers are concerned about the lack of processors that have been pledged in exchange for Nvidia’s commitments that give it good insight into the field.
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