Nvidia Q3 revenues grow 50% to $7.1B as it easily beats expectations

Nvidia reported revenues of $7.1 billion for its third fiscal quarter ended October 31, up 50% from a year earlier. Gaming revenue grew 42% to $3.22 billion. The numbers were above Wall Street’s expectations.

Nvidia reported non-GAAP earnings per share of $1.17 on revenues of $7.1 billion, up 60% from EPS of $1.04 on revenue of $6.5 billion a year earlier.

The Santa Clara, California-based company makes graphics processing units (GPUs) that can be used for games, AI, and datacenter computing. While many businesses have been hit hard by the pandemic, Nvidia has seen a boost in those areas. The company saw record revenue in its gaming, datacenter, and professional visualization platforms.

GAAP earnings per diluted share for the quarter were 97 cents, up 83% from a year ago. In after-hours trading, Nvidia’s stock is trading at $303.50 a share, up 2.5%.

Analysts expected Nvidia to report earnings for the October quarter of $1.11 a share on revenues of $6.83 billion.

“The third quarter was outstanding, with record revenue,” said Nvidia CEO Jensen Huang in a statement. “Demand for Nvidia AI is surging, driven by hyperscale and cloud scale-out, and broadening adoption by more than 25,000 companies. Nvidia RTX has reinvented computer graphics with ray tracing and AI, and is the ideal upgrade for the large, growing market of gamers and creators, as well as designers and professionals building home workstations.”

He added, “Our GTC event series showcases the expanding universe of Nvidia accelerated computing. Last week’s event was our most successful yet, highlighting diverse applications, including supply-chain logistics, cybersecurity, natural language processing, quantum computing research, robotics, self-driving cars, climate science, and digital biology.”

And he said, “Omniverse [a metaverse for engineers to simulate things] was a major theme at GTC. We showed what is possible when we can jump into virtual worlds. Omniverse will be used from collaborative design, customer service avatars, and video conferencing, to digital twins of factories, processing plants, even entire cities. Omniverse brings together Nvidia’s expertise in AI, simulation, graphics, and computing infrastructure. This is the tip of the iceberg of what’s to come.”

Huang will receive the chip industry’s highest honor, the Robert N. Noyce Award, at the Semiconductor Industry Association (SIA) annual awards dinner on November 18. The award is named after Intel cofounder Robert Noyce, who is credited with numerous pioneering achievements at the dawn of the chip industry.

Nvidia has seen a boom in both gaming and datacenter revenues as users go online during the pandemic. Gamers have been snatching up graphics cards to play PC games, but a shortage of semiconductors has hurt companies like Nvidia.

Nvidia is still waiting on regulatory approval for its $40 billion acquisition of Arm. The United Kingdom government said it has launched a six-month review of the deal.

Nvidia touted its Nvidia GTC event last week, where I moderated a session on a vision for the metaverse. Nvidia said it launched or updated 65 software development kits for AI products, showed off its new Omniverse updates for its metaverse for engineers. Nvidia said cryptocurrency mining revenue was $105 million. Huang’s keynote from GTC has been viewed 25 million times.

In an analyst call, Huang said the success of Omniverse will be driven by engagement with developers and engineers. He said  70,000 engineers are engaged with it, and he expects Omniverse will be helpful to those who are stuck with remote working conditions.

Chip shortages have been a tough part of the semiconductor business in the pandemic, but Huang said in the call that he believes his company has strong commitments from its contract manufacturing partners.

Datacenter

Datacenter revenues hit $2.94 billion, up 55% from a year earlier. Nvidia launched a variety of products in the quarter, and it announced its plans to build Earth-2, an AI supercomputer for tackling the climate change crisis.

Gaming

As noted, gaming revenue was $3.22 billion, up 42% from a year earlier and up 5% from the previous quarter. It added RTX to games such as Marvel’s Guardians of the Galaxy, Battlefield 2042, and Dying Light 2. More than 200 games now support RTX, as well as 125 that support DLSS.

Professional visualization

Professional visualization generated revenues of $577 million, up 144% from a year earlier and up 11% from the previous quarter.

Automotive

Second-quarter automotive revenue was $135 million, up 8% from a year earlier and down 11% from the previous quarter.

Outlook

For the fourth quarter ending January 31, analysts expect earnings to be $1.09 a share on revenue of $6.86 billion. Nvidia expects to make gross margins of 65.3% and revenues of $7.4 billion.