Nvidia shares rally 7% as second quarter profit tops estimates

Nvidia earnings

Nvidia Corp (NASDAQ: NVDA) released strong earnings for the second quarter of 2019 after the closing bell on Thursday, pushing its shares higher in after-hours trade.

The GPU giant has been working to expand its market reach from being a key seller of graphics chips used by videogamers into furnishing equipment for large data centers.

Shares of Nvidia gained more than 5% in after-hours trading on the news. Prior to the earnings report, the stock had gained more than 11% since the beginning of the year.

NVDA Earnings & Outlook

Nvidia had net income of $552 million, or $0.90 per share in the three months ended July 28. That compares to net income of $947 million, or $1.54 per share that the company reported in the same period last year.

Excluding one-time costs and gains, Nvidia earnings came to $1.24 per share during the quarter. Analysts had predicted adjusted earnings of $1.15 per share, according to data compiled by Refinitiv.

Company-wide revenue stood at $2.58 billion, representing a 17% decline from $3.12 billion in the prior-year period. On average, analysts surveyed by Refinitiv had forecast revenue of $2.54 billion.

Nvidia generated revenue of $1.31 billion from its gaming business, down 27% on a year-over-year basis but above analysts’ estimates of $1.3 billion. Revenue from its data-center segment came to $655 million, representing a 14% decline from a year ago. Analysts expected the segment to post revenue of $668.5 million in the quarter.

For the current quarter, Nvidia views revenue of between $2.84 billion to $2.96 billion compared with analysts’ estimates of $2.98 billion. Gross margin is expected to come in at 62.5%, plus or minus 50 basis points while Wall Street expects it to be 60.2%.

Nvidia CEO Comments

“We achieved sequential growth across our platforms. Real-time ray tracing is the most important graphics innovation in a decade. Adoption has reached a tipping point, with NVIDIA RTX leading the way,” NVIDIA chief executive Jensen Huang said in prepared remarks.

“NVIDIA accelerated computing momentum continues to build as the industry races to enable the next frontier in artificial intelligence, conversational AI, as well as autonomous systems like self-driving vehicles and delivery robots,” Huang added.

Nvidia Corp Profile

Nvidia is a leading designer of graphics chips that enhance the experience on computing platforms. The firm’s chips are used in a variety of end markets, including high-end PCs for gaming, data centers, and automotive infotainment systems.

In recent years, the firm has broadened its focus from traditional PC graphics applications such as gaming to more complex and favorable opportunities, including artificial intelligence and autonomous driving, which leverage the high-performance capabilities of the firm’s graphics processing units. – Warrior Trading News