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Nvidia’s revenue tops expectations as to the strength of the effect in the video gaming and car units

(Reuters) – Nvidia Corp’s quarterly revenue beat Wall Street estimates on Thursday, despite the fall of the previous year, with a better-than-expected performance in the gaming and automotive chip companies, sending shares up 6 percent in extended trading.

FILE PHOTO: The logo of Nvidia Corporation, it is to be seen at this year’s annual Computex computer show in Taipei, Taiwan, May 30, 2017. REUTERS/Tyrone Siu/File Photo

The graphics chip maker’s forecast of the rate of profit are ahead of expectations for the current quarter, and said it would resume share repurchases after the completion of the acquisition of the networking products maker Mellanox this year.

Nvidia-developed processors for use in applications ranging from artificial intelligence to self-driving cars to data centers, but it is the biggest market for video-game machines.

The results are a good indicator for the chip industry, which is in a slow-down in the economy, with research firm Gartner predicting a 9.6% decline in global semiconductor revenue in 2019. The U.S.-china trade tensions, including tariffs on some products are chipmakers.

The total sales for the second quarter decreased 17% to $2.58 billion, but topped Wall Street’s targets of $2.55 billion, according to IBES data, Refinitiv.

The sales of the video-gaming business decreased by 27% to $1.31 billion. However, beating the analysts ‘ estimate of $1.28 billion, which is based on the average of five analysts. Sales in the automotive unit sales increased 30% to $209 million in the quarter.

Data-center revenue, which has been a source of concern, have decreased by 14% to $655 million, with just $671 million, consensus.

The company said it expects third-quarter revenue of $2.9 billion, plus or minus 2 per cent. Analysts on average were expecting revenue of $2.97 billion, according to IBES data, Refinitiv.

In the report, the second quarter adjusted gross margin of 60.1%, above expectations of 59.5%, according to FactSet data. The outlook for the third quarter, with the margin of 62.5%, plus or minus 50 basis points compared to the expectations of 60.2%

Nvidia’s net income fell 50% to $552 million, or 90 cents per diluted share, for the second quarter ended on July 28. With the exception of the items, it earned $1.24 per share, ahead of expectations of $1.15.

Reporting Munsif Vengattil in Bengaluru; Editing by Arun Koyyur and Peter Henderson

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