Nvidia Corp. provided a strong forecast despite supply constraints Wednesday, after doubling profits and producing record sales in the holiday quarter.
After earnings reached $3 billion and quarterly revenue surged past $7.5 billion for the first time over the holidays, Nvidia
NVDA,
+0.06%
executives suggested sales could top $8 billion for the first time in the current quarter. Driven “primarily” by data-center sales, they forecast revenue in the fiscal first quarter of $7.94 billion to $8.26 billion, well above the $7.31 billion estimated on average by analysts surveyed by FactSet
On the call with analysts, Colette Kress, Nvidia’s chief financial officer, said “there is expected to be accelerated growth as we move into Q1.”
“For Q1, our guidance can include an acceleration of data center from where we left in terms of Q4,” Kress said on the call. “We will have growth across several of our market performs within Q1, both data center, gaming and probably a couple others.”
Shares hovered steadily around a 2% decline after hours, following a less than 0.1% advance in the regular session to close at $265.11. Shares closed at a split-adjusted all-time high of $333.76 on Nov. 29. All share and per-share figures are presented as split-adjusted.
Back in mid-November, the Santa Clara, Calif.-based chip maker reported quarterly records across the board, much to Wall Street’s celebration, and had forecast that fourth-quarter data-center sales would grow faster sequentially than gaming sales. A year and a half ago, sales of data-center chips surpassed gaming sales for the first time, but that soon switched back.
Read: Nvidia seeks to lead gold rush into the metaverse with new AI tools
In the fourth quarter, gaming sales rose 37% to a record $3.42 billion from the year-ago quarter, or a sequential gain of 6%. Meanwhile, analysts surveyed by FactSet had expected Nvidia gaming sales of $3.36 billion.
On the data-center side, sales surged 71% to a record $3.26 billion from the year-ago quarter, or for a sequential quarterly gain of 11%, while analysts expected sales of $3.18 billion. Going forward, however, Nvidia said supply constraints, given the global shortage of chips and silicon-wafer-making capacity, will remain a headwind.
“We still have some supply constraints across a number of businesses,” Nvidia Chief Executive Jensen Huang said on the call. “Networking in the data center on business has been on supply constraint.”
Much of that headwind is coming from a lack of memory chips the company uses for its servers, he said.
“One of the largest bottlenecks is memory speed,” Huang told analysts. “We are the largest consumers of the fastest in the world. With no close second that I know. And, so, our consumption of fast memories is important to the work that we do.”
The largest suppliers of memory chips include Samsung Electronics Co.
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+1.49%,
SK Hynix Inc.
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+2.76%,
and Micron Technology Inc.
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+0.06%.
Nvidia reported fourth-quarter net income of $3 billion, or $1.18 a share, compared with $1.46 billion, or 58 cents a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were $1.32 a share, compared with 78 cents a share in the year-ago period.
Revenue surged to a record $7.64 billion, up 53% from $5 billion in the year-ago quarter. Analysts surveyed by FactSet had estimated adjusted earnings of $1.23 a share on revenue of $7.42 billion. Nvidia executives guided for revenue between $7.25 billion and $7.55 billion in November.
For more: Look back at earnings results from Intel as well as AMD
The earnings report comes a week after Nvidia’s $40 billion bid to acquire chip designer Arm Ltd. officially unraveled, much to Wall Street’s lack of surprise.
“We gave it our best shot,” Huang said on the call. “But, the headwinds were too strong and we could not get regulators the comfort they needed to approve our deal.”
Recently, Nvidia pushed past Facebook parent Meta Platforms Inc.
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for the title of seventh-largest publicly traded U.S. company by market cap.
Over the past 12 months, Nvidia shares were up 73% by Wednesday’s close, while the PHLX Semiconductor Index
SOX,
+0.03%
rose 10% over that period. Meanwhile, the S&P 500 index
SPX,
+0.09%
gained 14%, and the Nasdaq Composite Index
COMP,
-0.11%
was up less than 1%.