Sat, Feb 15, 2020 - Page 10 News List

Nvidia gives strong outlook as data centers spend more

Bloomberg

Nvidia Corp has given a strong revenue forecast for the first quarter, spurred by increasing demand for data center and gaming chips.

Revenue would be US$3 billion, plus or minus 2 percent, in the fiscal first quarter, the Santa Clara, California-based company said in a statement on Thursday. That compares with an average analyst estimate of US$2.84 billion. Gross margin, or the percentage of sales remaining after deducting the cost of production, would be 65 percent, plus or minus 50 basis points.

After slowing investment in their infrastructure last year, owners of the giant data centers that power Internet services are spending again, including increasing their deployments of graphics chips used to boost artificial intelligence (AI) calculations. Nvidia, the biggest maker of graphics chips used in gaming PCs, has adapted its technology for the AI market, creating a new multibillion-dollar business.

Chief executive officer Jensen Huang said the use of such computing is spreading, making growth less reliant on the spending plans of a handful of companies.

“It’s not just about hyperscalers any more, it’s about start-ups and industry,” Huang said in an interview. “I’m very confident that the future of computing will involve accelerated computing.”

Nvidia shares rose about 8 percent in extended trading following the report. Earlier, they closed at US$270.78 in New York. They have jumped 77 percent in the past 12 months.

Huang has built Nvidia into one of the most valuable tech companies by finding new customers for gaming chips. The ability of these components to do calculations in parallel makes them useful for AI workloads and, potentially, self-driving vehicles.

The majority of the company’s sales still come from PC gaming, where Nvidia’s graphics chips create the most realistic experiences. Top-of-the-line GeForce parts cost more than many consumers spend on a whole PC.

Fiscal fourth-quarter profit was US$950 million, or earning per share of US$1.53, compared with US$567 million, or US$0.92 per share a year earlier. Revenue surged 41 percent to US$3.1 billion and profit excluding certain costs was US$1.89 per share in the period ending Jan. 26, the company said.

Analysts, on average, had predicted earnings of US$1.66 per share on sales of US$2.96 billion, according to data compiled by Bloomberg.

Gaming sales in the quarter jumped 56 percent from the same period a year earlier to US$1.49 billion. Nvidia’s Data Center unit contributed US$968 million, a gain of 43 percent, a presentation on its Web site showed. Automotive-related sales were flat.

The company said it is likely to close the acquisition of Mellanox Technologies Ltd in the “early part of calendar 2020.”

Discussions with Chinese regulators about the transaction are progressing and share buybacks would resume after the completion of the deal, Nvidia said.

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