Nvidia reported better-than-expected earnings and revenue on Wednesday, as the company’s booming data center business recorded year-over-year growth of 73%.
The stock rose about 6% in extended trading.
Here’s how the company did, compared with estimates from analysts polled by LSEG:
- Earnings per share: 96 cents adjusted vs. 93 cents expected
- Revenue: $44.06 billion vs. $43.31 billion expected
Nvidia said it expects about $45 billion in sales in the current quarter, versus LSEG estimates of $45.9 billion in sales in the July quarter. The company said its guidance would have been about $8 billion higher except for lost sales from a recent export restriction on its China-bound H20 chips.
During the quarter, the U.S. government informed Nvidia that its previously approved H20 processor for China would require an export license. Nvidia said it incurred $4.5 billion in charges related to excess inventory for the chip, and would have recorded $2.5 billion in extra sales if the chip hadn’t been restricted.
Nvidia said its gross margin of 61% for the quarter would have been 71.3% if not for the China-related charge.
Nvidia CEO Jensen Huang told investors on an earnings call that the $50 billion market in China for AI chips is “effectively closed to U.S. industry.”
“The H20 export ban ended our Hopper data center business in China,” Huang said.
Despite the political tension, Nvidia’s report shows the company is continuing to grow aggressively, powered by demand for its artificial intelligence chips, which are used to build and deploy applications like OpenAI’s ChatGPT.
“Global demand for Nvidia’s AI infrastructure is incredibly strong,” said Huang in a statement.
Net income increased 26% to $18.8 billion, or 76 cents per share, from $14.9 billion, or 60 cents per share, a year earlier.
Based on extended trading, Nvidia shares are now less than 5% below their record high reached in January and are at their highest in four months.
Revenue rose 69% in the quarter from $26 billion a year earlier. Sales in the company’s data center division, which includes AI chips and related parts, grew 73% on an annual basis to $39.1 billion, accounting for 88% of total revenue.
Nvidia said large cloud providers made up just under half the data center unit’s revenue, and $5 billion in sales were for the company’s networking products, which are used to connect scores of Nvidia chips for AI research.
Microsoft has “deployed tens of thousands of Blackwell GPUs and is expected to ramp to hundreds of thousands” of the company’s GB200 product, due largely to its relationship with OpenAI, Chief Financial Officer Colette Kress said.
The company’s gaming division, which includes its chips for playing 3D games, grew 42% on an annual basis to $3.8 billion. Nvidia primarily made gaming chips before its semiconductors became essential for AI. It still makes the processor at the heart of the new Nintendo Switch 2 console. But its gaming chips can also be used for AI applications.
The company’s automotive and robotics division reported sales growth of 72% to $567 million. Nvidia attributed the rise to additional sales of its chips and software for self-driving cars. The company’s professional visualization business, which comprises chips for 3D design, as well as the company’s recently released DGX Spark and DGX Station desktops for AI, grew 19% to $509 million in revenue during the quarter.
Nvidia said it spent $14.1 billion on share repurchases during the quarter and paid $244 million in dividends.
