Nvidia guidance tops estimates as AI-led chip demand continues; shares jump

February 21, 2024 4:41 PM EST
(Updated - February 22, 2024 3:47 AM EST) -- Nvidia reported Wednesday better-than-expected guidance and fiscal fourth-quarter results as an artificial intelligence-led surge in demand for chips helped ease the hit from the U.S. chip export ban to China.

Nvidia (NASDAQ: NVDA) rose in extended trading following the report.

Chief Executive Jensen Huang, weighing in on the soaring enthusiasm for AI that has fueled a surge in the company's valuation over the past 12 months, said the nascent technology is now at a "tipping point."

"Demand is surging worldwide across companies, industries and nations," he said.

For the three months ended Dec. 31, Nvidia announced earnings per share of $5.16 on revenue of $22.1 billion. Analysts polled by anticipated EPS of $4.64 on revenue of $20.55 billion.

Data center, a gauge of AI demand, saw revenue swell to $18.40B, up 409% from a year earlier, beating estimates of $17.06B amid rising demand for its AI GPUs including the H100.

The gaming business saw revenue jump 56% to $2.87B in Q4 year-on-year, while the automotive sector slipped 4% to $281M.

The beat comes even as data center sales to China "declined significantly" in the fourth quarter due to U.S. government licensing requirements, the company said.

For the current quarter, revenue is expected to be $24B, give or take 2%, topping analyst estimates for $22.01B. Adjusted gross margins are expected to be 76.3% and 77.0%, respectively, plus or 50 basis points.

Speaking with investors, Huang said Nvidia's high-end chips had become the "AI-generation factories" in a new industrial revolution that will encompass "every industry." The company is now looking to bolster this position, although analysts have flagged that intensifying competition and cooling sales in China may complicate this task.

"We had never seen $2B+ of upside to quarterly revenue guidance until Nvidia did it a few quarters ago, but it has become routine during the AI surge," analysts at Morgan Stanley wrote.

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