By Asa Fitch
Strong growth in computer games and remote computing services, driven by people stuck at home during the coronavirus pandemic, lifted earnings for chip maker Nvidia Corp.
First-quarter revenue rose 39% from a year earlier to $3.08 billion, the Santa Clara, Calif.-based company said Thursday. Earnings per share totaled $1.47, more than double last year's figure.
"As the virus spread globally, much of the world started working and learning from home and gameplay surged," Chief Financial Officer Colette Kress told analysts. The company recorded a 50% increase in hours played on its games platform, as well as booming sales of laptops and game consoles using Nvidia chips, she said.
"Animal Crossing," a world-building game, set sales records after its launch on the Nintendo Switch console in March. The Switch console that uses Nvidia chips has been popular, too, topping internal forecasts with over three million sold in the first quarter, Nintendo said this month.
Nvidia has also benefited from a shift toward cloud computing, driven by workers logging on from home and increasingly relying on remote computing power. Microsoft Corp., a leading cloud-computing competitor, last month reported an earnings jump partly from computing demand tied to the health crisis. Many of Nvidia's chips are sold to data centers, where they make rapid calculations that power artificial intelligence.
The company said its data-center sales rose 80% to a record $1.14 billion. Revenue at the games segment increased 27% to $1.34 billion.
Nvidia's results provide an indication of how some corners of the tech industry might be more resilient than others to the impact of the prolonged effects of the pandemic. The results reported by most major U.S. tech companies in recent weeks covered the first three months of the year, and reflect only a few weeks of quarantine measures rolled out across much of the country in March. Nvidia's latest earnings cover the February-through-April period, offering a broader look at the pandemic's impact.
The company's rollout of new products has continued apace despite the global health crisis. Earlier this month, Chief Executive Jensen Huang revealed an advanced graphics-processing chip design and a new type of chip aimed at accelerating artificial-intelligence calculations in data centers.
Nvidia issued guidance for the current quarter, which ends in July, of about $3.65 billion in sales, above analysts' $3.25 billion average forecast in a FactSet survey. The company said its forecast reflects Nvidia's purchase of Mellanox Technologies Ltd. for about $7 billion, which was announced last year and closed late last month.
The company's results for the April quarter beat Wall Street projections. Analysts had expected sales of $2.98 billion and earnings per share of $1.39.
Nvidia's shares traded mixed in after-hours trading. The stock had surged about 30% since it last reported earnings.
The company said it was evaluating when it would resume a share-buyback program it had suspended during the acquisition of Mellanox, adding that it would act "based on market conditions."
Write to Asa Fitch at firstname.lastname@example.org
(END) Dow Jones Newswires
May 21, 2020 18:31 ET (22:31 GMT)Copyright (c) 2020 Dow Jones & Company, Inc.