Nvidia Shares Fall Despite Revenue Growing 39% From Last Year

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Shares of Nvidia were slightly down in extended trading on Thursday despite the large cap chip maker announcing a revenue growth of 39% from last year.

The California-based company reported its first quarter earnings on Thursday revealing and reported EPS of $1.80 adjusted and revenue of $3.08 billion. The company’s data center business also reported over $1 billion in revenue for the first time. This is compared to adjusted earnings per share of $0.88 on revenue of $2.22 billion in the year ago quarter.

Wall Street was waiting for adjusted earnings of $1.69 and revenue of $3 billion per Refinitiv consensus estimates.

“COVID-19 created challenges in supply and demand. Early in the quarter, our partners’ supply chains were disrupted. Shelter-in-place resulted in closure of retail outlets and China iCafes, affecting sales of our gaming products,” the company said in a letter from the CFO. “However, work from home, learn at home, and gaming drove a surge in e-tail demand.”

Looking ahead, Nvidia expects to report about $3.65 billion in revenue in its second fiscal quarter
with gross margins around 58.6%.

Nvidia also recently closed the acquisition of Mellanox in April, which will helps its data center business.

CEO Jensen Huang said on the earnings call, “We’re using NVIDIA’s unique capabilities to fight the virus. A great deal of science being done on COVID-19 uses NVIDIA technology for acceleration. Some of the many examples including sequencing the virus, analyzing drug candidates, imaging the virus at molecular resolution with cryo-electron microscopy, and identifying elevated body temperature with AI cameras. And third, because COVID-19 won’t be the last killer virus, we need to be ready for the next outbreak. NVIDIA technology is essential for the scientific community to develop an end-to-end computational defense system, a system that can detect early, accelerate the development of a vaccine, contain the spread of disease, and continuously test and monitor.”

He added, “We are racing to deploy the NVIDIA Clara computational healthcare platforms. Clara Parabricks can accelerate genomics analysis from days to minutes. Clara Imaging will continue to partner with leading research institutes to develop state-of-the-art AI models to detect infections, and Clara Guardian will connect AI to cameras and microphones in hospitals to help overloaded staff watch over patients.”

The company said that it is evaluating the “timing” of its share repurchase program and that it will continue to pay dividends.

Shares are up 50% on the year.

Disclaimer: We have no position in NVIDIA Corporation (NASDAQ: NVDA) and have not been compensated for this article.

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