Nvidia Corp. gave a strong sales forecast on rising demand for its chips from data centre operators.
Revenue will be about US$4.4 billion in the fiscal third quarter, the Santa Clara, California-based company said Wednesday in a statement. That compares with an average analyst estimate of US$3.96 billion, according to data compiled by Bloomberg.
Nvidia is the biggest manufacturer of semiconductors that make video games run on computers as realistically as possible. It’s carved out a new multibillion-dollar business selling these components to data centre owners that use the chips to speed up artificial intelligence software. Sales from this division exceeded gaming revenue for the first time in the fiscal second quarter.
The global shift to working and studying from home has fired up sales of laptops and increased demand for cloud services that rely on server computers using Nvidia graphics processors.
Data centre chip sales came in at US$1.75 billion in the fiscal second quarter. That was up 167 per cent from the same period in 2019. The most-recent results included the acquisition of Mellanox Technologies Ltd. Revenue from gaming was US$1.65 billion in the quarter, up 26 per cent from a year earlier.
The company is in negotiations to acquire Arm Ltd., whose chip designs and technology underpin the smartphone industry. The talks are are exclusive and would result in the largest ever industry acquisition, Bloomberg has reported.
Chief Executive Officer Jensen Huang leads a company that’s captured the attention of investors like few others in the last decade. Nvidia’s stock ended 2010 at US$15.42 and closed at US$485.54 in New York on Wednesday. That’s given it a market value of about US$300 billion, almost US$100 billion more than Intel Corp., the world’s largest chipmaker.
Nvidia shares was little changed in extended trading following the report.
Gross margin, or the percentage of sales remaining after deducting the cost of production, will be about 62.5 per cent in the current quarter, Nvidia also said.
Profit in the fiscal second quarter was US$622 million, or 99 cents a share, compared with US$552 million, or 90 cents, a year earlier. Revenue surged 50 per cent to US$3.87 billion and profit excluding certain costs was US$2.18 a share in the period, which ended July 26, the company said. Analysts, on average, had predicted earnings of US$1.97 a share on sales of US$3.66 billion.
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