The News: NVIDIA beat elevated analyst expectations for both earnings and revenue for the fourth quarter of its fiscal year, which ended in December.
NVIDIA stock rose under 2% in extended trading.
Here’s how NVIDIA did:
- Earnings: $3.10 per share, adjusted, vs. $2.81 per share as expected by analysts, according to Refinitiv.
- Revenue: $5.00 billion, versus $4.82 billion as expected by analysts, according to Refinitiv.
Sales were up 61% year-over-year.
Investors had been expecting revenue growth over 55% from last year and NVIDIA beat those expectations, even during a worldwide semiconductor shortage. Read the full news piece on CNBC.
Analyst Take: NVIDIA’s momentum continued into the final quarter of its fiscal year as the company sees several record-breaking results, including:
Record revenue of $5.00 billion, up 61 percent from a year earlier.
Record Gaming revenue of $2.495 billion, up 67 percent from a year earlier.
Record datacenter revenue of $1.93 billion, up 97 percent from a year earlier.
This quarters results represent 8 straight quarters outpacing expectations for both the top and bottom line. Impressive results at face value, and as you dig deeper, there isn’t much not to like. With Mellanox firmly baked into the numbers for the past 3 quarters, we are seeing how that acquisition has shaken out, and if you track the past 8 quarters, you can see in its key segments the growth has been strong, while growth in smaller categories have lagged, but have remained overall consistent to round off the overall results.
The excitement around NVIDIA will continue throughout the year, and the pending acquisition of Arm is driving even more buzz around NVIDIA as investors are beginning to fully understand the implications that this acquisition will have for NVIDIA’s long term trajectory. I remain steadfast in saying that this will be a complicated transaction that will all but certainly face legal challenges and regulatory scrutiny, which we began to hear more about this past quarter, but there are no strong indicators at this point in time to suggest it won’t be completed–Such an outcome will be very good for NVIDIA.
Let’s dive into the results for the companies two largest segments Automotive and Data Center.
Gaming Sees Record-Breaking Revenue
Gaming reached a new record-breaking number at $2.495 billion, reflecting a growth of 10% sequential and 47% YoY. These numbers were backed by the company’s announcement of its largest ever laptop launch around the popular GeForce RTX 30 Series GPUs. RTX continued an overall strong run, which saw adoption of 36 more titles including Minecraft, Fortnight, and Cyberpunk 2077. The new NVIDIA broadcast offering have continued to gain adoption as it drives improved experience and interaction between gamers.
NVIDIA’s gaming business continues to be a pillar of its upward trajectory, representing nearly 50% of its revenue each of the past two quarters. The brand also continues to build both advocacy and a growing portfolio of both devices and games being delivered on NVIDIA’s platforms and now has its streaming service available on iOS Safari. I expect this momentum to continue.
Datacenter Also Breaks a Record With This Quarter’s Results
Datacenter continues to be the fastest-growing part of NVIDIA’s business seeing growth both through acquisition and organic adoption of its leading AI solutions. This quarter marked a record-breaking revenue number, coming in at $1.903 billion. This reflects an all-inclusive YoY growth number of 97%. Sequential results for datacenter were flat, coming in just slightly higher than last quarter’s record breaking results.
The datacenter business serves as a major strength for the company. Ampere has been received positively in the market, and the companies AI frameworks like Jarvis and Merlin, which focus on recommendation engines and conversational AI are also seeing increased interest and adoption.
I expect the data center business will continue to thrive as the company’s investments in AI are rapidly evolving to address much more than training, addressing the significant opportunities for enterprise AI.
The company’s other business segments of Automotive and ProViz also saw QoQ growth of 16% and 30%, respectively; however, these businesses remain off the pace on a YoY basis seeing revenues fall by 11% and 7%, respectively, during the same period last year.
Overall Impression of NVIDIA Q2 Earnings
NVIDIA wrapped up its FY 21 with strong momentum and record breaking results. The momentum for the company seems to be gaining steam through innovation, acquisition, and of course, record-breaking results. This seems to be working around any macroeconomic forces
For me, the most notable thing is the rapid momentum of its datacenter business. With back-to-back quarters delivering triple-digit growth YoY, it is clear that AI adoption is accelerating, and NVIDIA is continuing to operate as the market leader in this space while holding onto its AI Training market share and expanding its influence in the inference space.
With forward-looking revenue suggesting another strong quarter ahead, coming in above this quarter’s result at $5.3 billion, the company’s successful run looks set to continue in its new fiscal year. It will be interesting to keep tabs on the growth, the impact of supply chain interruptions on its Q1 guidance, and the further development of the Arm acquisition as regulators and competitors continue to raise concerns about the deal.
Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.