Nvidia Corp on Wednesday told investors that demand remains strong for its artificial intelligence (AI) and data-center chips, even as the company continues to struggle with a slowdown in the PC market.
While revenue declined 17 percent to US$5.93 billion in the fiscal third quarter, that handily beat the US$5.79 billion average estimate.
Nvidia’s data center unit posted a 31 percent sales increase, also beating projections.
Photo: Reuters
That helped make up for a 51 percent drop in the company’s gaming business — a market tied to PC sales.
Although Nvidia’s outlook for this quarter missed some estimates, the forecast was solid enough to satisfy analysts, or at least remove concerns that its business is rapidly deteriorating.
Fundamentally strong demand for machines that run AI software would help the company weather a difficult economic environment, particularly in China, Nvidia chief executive officer Jensen Huang (黃仁勳) said in an interview.
After excessive inventory is cleared, this quarter would show sequential growth, helped by the debut of new products, the company said.
However, even while adding a dose of optimism, Huang said that the economy and COVID-19 restrictions in China would continue to take a toll.
“The macro environment is still difficult,” he said. “Inflation is real. COVID lockdowns in China still exist.”
Data center sales were helped last quarter by orders from US cloud service providers, with demand weakening in China, Nvidia said.
The division generated US$3.83 billion in revenue in the third quarter, compared with a US$3.79 billion estimate.
The firm earlier on Wednesday announced further inroads into the data-center market, when it said that Microsoft Corp would use its graphics chips, networking products and software for a new AI offering.
Santa Clara, California-based Nvidia expects fourth-quarter revenue to be about US$6 billion, plus or minus 2 percent. That compares with an estimate of US$6.09 billion.
Third-quarter profit was US$0.58 per share, excluding some items, short of the US$0.7 projection.
The company is caught up in the worsening standoff between China and the US. Washington is increasingly trying to cut China off from advanced chip technology, threatening Nvidia’s access to the market.
The company’s best AI offerings are now subject to licensing requirements for export to China, a hurdle that the company said might cost it hundred of millions of dollars in lost revenue.
Nvidia recently debuted a new offering for the China market that it says is compliant with the restrictions.
Nvidia’s outlook was more upbeat than that of Micron Technology Inc earlier on Wednesday.
Micron warned that it was cutting production because next year would be worse than previously feared.
It is reducing production of DRAM and NAND wafers by about 20 percent compared with the fiscal fourth quarter “in response to market conditions,” Micron said in a statement.
Year-on-year DRAM bit supply would need to shrink and NAND bit supply growth would need to be significantly lower than previous estimates, the company said.
The leading US maker of memory semiconductors said it is also working toward additional capital spending cuts.
In September, it said it would cut spending by 30 percent in its fiscal year.
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