Nvidia Posts Record Revenue And Strong Guidance

Nvidia’s (NVDA) stock is up 6% after the chipmaker posted better-than-expected financial results, including record revenue, and issued strong forward guidance.The Silicon Valley-based designer of semiconductors and processors reported earnings per share (EPS) of $0.96 U.S., which was ahead of the $0.93 U.S. expected on Wall Street.Revenue reached a quarterly record of $44.06 billion U.S., which topped the $43.31 billion U.S. that had been expected among analysts. Sales were up 69% from a year earlier. Management attributed the results to the company’s booming data centre business, which grew 73% year-over-year during the year’s first quarter and accounted for 88% of total revenue.In terms of guidance, Nvidia said it expects $45 billion U.S. in sales for the current quarter, which is close to Wall Street estimates of $45.90 billion U.S.Executives said the guidance would have been $8 billion U.S. higher except for lost sales from recent export restrictions placed on the company’s sales to China.In recent months, the administration of U.S. President Donald Trump informed Nvidia that its previously approved H20 processor for the Chinese market requires an export license. Nvidia said it incurred $4.50 billion U.S. in charges related to excess inventory for the chip and would have recorded $2.50 billion U.S. in extra sales if the chip had not been restricted.Management added that Nvidia’s gross margin of 61% for the quarter would have been 71% if not for the China-related charge.Despite the political issues, Nvidia continues to grow at a fast clip, powered by demand for its artificial intelligence (A.I.) microchips.Additionally, the company’s gaming division, which includes microchips used to power video game consoles and 3D games, grew 42% on an annual basis to $3.80 billion U.S. Nvidia makes the main processor that runs the Nintendo Switch consoles. The company’s automotive and robotics division reported sales growth of 72% to $567 million U.S. Nvidia attributed the rise to strong sales of its microchips for self-driving cars. Nvidia spent $14.10 billion U.S. on share repurchases during the quarter and paid $244 million U.S. in dividends.Prior to today (May 29), Nvidia’s stock had declined 3% this year to trade at $134.81 U.S. per share.