Nvidia Earnings Rise, as Coronavirus Lifts Games and Remote Services -- 2nd Update
By Asa Fitch
Strong growth in computer games and remote computing services,
driven by people stuck at home during the coronavirus pandemic,
lifted earnings for chip maker Nvidia Corp.
First-quarter revenue rose 39% from a year earlier to $3.08
billion, the Santa Clara, Calif.-based company said Thursday.
Earnings per share totaled $1.47, more than double last year's
"As the virus spread globally, much of the world started working
and learning from home and gameplay surged," Chief Financial
Officer Colette Kress told analysts. She pointed to booming sales
of laptops and game consoles using Nvidia chips.
"Animal Crossing," a world-building game, set sales records
after its launch on the Nintendo Switch console in March. The
Switch console that uses Nvidia chips has been popular, too,
topping internal forecasts with over three million sold in the
first quarter, Nintendo said this month.
Nvidia has also benefited from a shift toward cloud computing,
driven by workers logging on from home and increasingly relying on
remote computing power. Microsoft Corp., a leading cloud-computing
competitor, last month reported an earnings jump partly from
computing demand tied to the health crisis. Many of Nvidia's chips
are sold to data centers, where they make rapid calculations that
power artificial intelligence.
The company said its data-center sales rose 80% to a record
$1.14 billion. Revenue at its games segment increased 27% to $1.34
Nvidia's results provide an indication of how some corners of
the tech industry might be more resilient than others to the impact
of the prolonged effects of the pandemic. The results reported by
most major U.S. tech companies in recent weeks covered the first
three months of the year, and reflect only a few weeks of
quarantine measures rolled out across much of the country in
Nvidia's latest earnings cover the February-through-April
period, offering a broader look at the pandemic's impact. The
company's rollout of new products has continued apace despite the
global health crisis. Earlier this month, Chief Executive Jensen
Huang revealed an advanced graphics-processing chip design and a
new type of chip aimed at accelerating artificial-intelligence
calculations in data centers.
Nvidia issued guidance for the current quarter, which ends in
July, of about $3.65 billion in sales, above analysts' $3.25
billion average forecast in a FactSet survey.
The company said its forecast reflects Nvidia's purchase of
Mellanox Technologies Ltd. for about $7 billion, which was
announced last year and closed late last month.
The company's results for the April quarter beat Wall Street
projections. Analysts had expected sales of $2.98 billion and
earnings per share of $1.39.
Nvidia's shares were lower in after-hours trading Thursday
afternoon but trimmed losses from the regular session. The stock
had surged about 30% since it last reported earnings.
The company said it was evaluating when it would resume a
share-buyback program it had suspended during the acquisition of
Mellanox, adding that it would act "based on market
Write to Asa Fitch at firstname.lastname@example.org
(END) Dow Jones Newswires
May 21, 2020 18:50 ET (22:50 GMT)
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