Nvidia’s revenue forecast beats as demand for gaming chip rises

(Reuters) – Nvidia Corp forecast second-quarter revenue above Wall Street estimates on Thursday, as they expected that the sales of the graphics chip to take advantage of a recovery in the gaming market.

FILE PHOTO: The logo of Nvidia Corporation is seen during the annual Computex computer trade show in Taipei, Taiwan, May 30, 2017. REUTERS/Tyrone Siu/File Photo

While Nvidia has been pushing into newer growth areas such as data centres, artificial intelligence and self-driving cars, the main business still remains the sale of chips that the video-game graphics.

“I think that China has stabilised. There are about 300 million PC gamers in China, and people expect to grow,” Chief Executive Jensen Huang said on a post-earnings conference call.

The revenue of the gaming chip business, which accounts for almost half of Nvidia’s total sales increased 11 percent to $1.05 billion in the fourth quarter, beating research firm Factset estimates of $933.5 million.

The company said it also expects further growth in the revenue of the gaming laptops of this year, but added that the CPU shortages, while improving influence on the initial slope of the business.

The company forecast revenue of $2.55 billion, plus or minus 2% for the current quarter, well above analysts ‘ expectations of $2.53 billion, according to the IBES data of Refinitiv.

Top Insights analyst Kinngai Chan said that the current quarter outlook is “better than feared”, with the mid-end gaming segment remains the growth driver.

However, the revenue from its data center business decreased to $634 billion, missing analysts estimate of $663.7 million.

Nvidia’s net profit fell to $394 million, or 64 cents per share, in the first quarter ended April 28 of $1.24 billion, or $1.98 per share, a year earlier.

Excluding items, Nvidia earned 88 cents per share, above the 81 cents per share estimated by analysts.

The total revenue decreased to $2.22 billion, but was still above analysts’ estimates of $ 2.20 billion.

The company’s shares were up 1.5% at $162.61 in the extended trade.

Reporting by Sayanti Chakraborty in Bengaluru; Editing by Anil D’silva

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