Nvidia (NVDA) Q4 2023 Results

Nvidia shares rose more than 8% in extended trading on Wednesday after the company reported slightly higher revenue and net profit than Wall Street expected, despite a year-over-year decline in both categories. Here’s how the chip maker compared to Refinitiv’s consensus expectations for the quarter ended in January:

• EPS: $0.88, adjusted, compared to expectations of $0.81
• Income: $6.05 billion, compared to expectations of $6.00 billion

Nvidia reported $0.57 in GAAP net earnings per share. Nvidia forecast $6.5 billion in sales in its first quarter, higher than the $6.33 billion expected by Wall Street.

Although both revenue and earnings fell from last year’s $1.32 per share and $7.64 billion in sales, Nvidia has increasingly been seen by investors as one of the chip stocks best positioned to weather an economic downturn that hurts sales of PC and semiconductor products.

Nvidia’s data center business, which includes chips for AI, continued to grow, suggesting it could continue to benefit greatly from artificial intelligence software that ChatGPT and Microsoft Bing’s AI chatbot. Nvidia GPUs are well suited for training and running machine learning software.

The stock rose about 45% in 2023 ahead of Wednesday’s earnings report.

Nvidia CEO Jensen Huang said on a call with analysts that AI is at an “inflection point,” pushing companies of all sizes to buy Nvidia chips to develop machine learning software.

“Generative AI’s versatility and capabilities have sparked a sense of urgency in companies around the world to develop and deploy AI strategies,” Huang said.

The majority of Nvidia’s sales of artificial intelligence GPUs fall into the company’s data center category. Data center revenue increased 11% year over year to $3.62 billion. The company said the growth was due to US cloud service providers buying more products.

Gaming revenue fell, as expected, as sales were very high in recent years. The pandemic encouraged gamers to upgrade their systems with new graphics cards from companies like Nvidia, but sales slowed significantly over the past year.

Specifically, Nvidia reported $1.83 billion in gaming revenue in the fourth quarter, down 46% from the same time last year. The company said the decline was due to it selling fewer chips to partners because they currently have too much inventory.

Nvidia also said it shipped fewer game console chips in the quarter, which is reported in the gaming category. Nintendo uses an Nvidia chip to power the Switch.

Other categories, such as professional visualization and automotive chips, are still much smaller than the company’s gaming and data center businesses. Nvidia’s professional visualization business for designers reported $226 million in revenue, down 65% year over year, and automotive revenue was $294 million, up 135% from last year.