UPDATE: Nvidia earnings roar past Street estimates, shares rise almost 4%

11/13/17 08:27 AM EST

By Wallace Witkowski, MarketWatch

All revenue categories top estimates except auto hardware sales

Nvidia Corp. shares rose almost 4% in premarket trade Friday, extending late-session gains after the Santa Clara, Calif.-based graphic processing unit maker's quarterly results and revenue outlook topped Wall Street estimates.

Nvidia (NVDA) shares were last up 3.6%. That follows a 1.8% decline in Thursday's regular session. Recently, shares hit a record close of $212.03 on Tuesday.

The company reported third-quarter net income of $838 million, or $1.33 a share, compared with $542 million, or 83 cents a share, in the year-ago period. Revenue rose to $2.64 billion from $2 billion in the year-ago period. Analysts surveyed by FactSet had estimated 95 cents a share on revenue of $2.36 billion.

The consensus on Estimize, a software platform that uses crowdsourcing from hedge-fund executives, brokerages, buy-side analysts and others, for adjusted earnings was $1.01 a share on revenue of $2.41 billion.

For the fourth quarter, Nvidia estimates revenue of $2.65 billion, plus or minus 2 percentage points, or $2.6 billion to $2.7 billion. Analysts surveyed by FactSet had forecast revenue of $2.44 billion.

By Thursday's close, shares had risen 92% year to date, compared with a 43% year-to-date rise in the PHLX Semiconductor index and a more than 15% rise in the S&P 500 index .

Auto hardware sales the one cylinder that doesn't fire

Nvidia topped all Wall Street sales estimates in all their product categories save one, reporting a 13% rise in automotive hardware sales to $144 million, shy of the Wall Street consensus view of $158.6 million.

In October, Nvidia unveiled a licensed-plate sized product called the Drive PX Pegasus (http://www.marketwatch.com/story/nvidia-wants-to-put-license-plate-sized-data-centers-into-self-driving-taxis-2017-10-10) that has the power of 100 servers in a data center to advance its push into autonomous driving vehicles. Recently, shares dipped after Tesla Inc.(TSLA) Chief Executive Elon Musk hinted the company may take a new direction with regards to self-driving car hardware (http://www.marketwatch.com/story/elon-musk-hints-at-tesla-self-driving-hardware-change-nvidia-stock-drops-2017-11-01), where Nvidia figures as a prominent partner.

In Nvidia's largest segment, the company reported a 25% rise in gaming revenue to $1.56 billion, above the Wall Street consensus of $1.28 billion.

Data-center revenue more than doubled to $501 million, above the consensus view of $461.1 million. In a conference call, Nvidia co-founder and Chief Executive Jensen Huang said the company has been ramping up its Volta-based data-center products "strongly" this quarter and last quarter.

Huang noted that every major cloud provider, such as Alphabet Inc.'s (GOOGL) (GOOGL) Google, Amazon.com Inc.'s(AMZN) AWS, Alibaba Group Holding Ltd.(BABA) , Baidu Inc.(BIDU), Tencent Holdings Ltd.(0700.HK), and "even" Oracle Corp.(ORCL) , has announced support for the Volta-based hardware. Nvidia annoucned a big deal with Chinese-based cloud providers (http://www.marketwatch.com/story/nvidia-strikes-deals-for-ai-focused-chips-with-chinese-tech-giants-2017-09-25) in September, and recently data has shown China driving cloud-based sales growth (http://www.marketwatch.com/story/big-cloud-computing-growth-seeded-by-china-spending-boosting-alibaba-2017-11-06).

Sales of PC/mobile OEM equipment rose 3% to $191 million, while analysts were looking for $182.2 million on average. One hitch there, however, were sales of cards for mining cryptocurrency. Chief Financial Officer Colette Kress said crypto-related sales accounted for $70 million in the third quarter, compared with $150 million in the second quarter.

Following second-quarter results in August, Huang was very enthusiastic (http://www.marketwatch.com/story/nvidia-more-bullish-on-cryptocurrency-than-amd-2017-08-10) about the cryptocurrency market, but on Thursday's conference call he appeared a little more subdued, calling it a "small, but not zero, part of our business."

Data visualization revenue rose 15% to $239 million versus the Street view of $234.9 million.

-Wallace Witkowski; 415-439-6400; AskNewswires@dowjones.com

 

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11-13-17 0827ET

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