Wall Street has been telling the world+dog that Nvidia would be coining it in, thanks to an obsession with AI.
However, Nvidia Chief Financial Officer Colette Kress warned that the next quarter would be hit by new export restrictions that will likely affect customer sales in China.
In a letter to shareholders, Kress said: "Sales, to these destinations will decline significantly in the fourth quarter of fiscal 2024, though we believe the decline will be more than offset by strong growth in other regions.”
It is depressing for Nvidia, which reported record profits in the third quarter on the back of demand for AI hardware.
The company reported earnings before certain costs, such as stock compensation of $4.02, well ahead of Wall Street’s forecast of $3.37. Revenue for the period grew by an impressive 206 per cent to $18.2 billion, well ahead of the analysts’ $16.18 billion sales.
Nvidia also reported net income of $9.24 billion, up from just $680 million one year earlier.
Driving Nvidia’s growth is the all-important data centre segment, which delivered revenue of $14.51 billion in the quarter, up 279 per cent and beating the consensus estimate of $12.97 billion. More than half of that revenue came from cloud infrastructure providers such as Amazon Web Services and Google Cloud, with most of the rest coming from large enterprises.
Nvidia’s gaming segment, once its biggest business unit, added revenue of $2.86 billion, up 81 per cent from a year earlier and above the consensus estimate of $2.68 billion. The gaming segment was the larger of Nvidia’s two main business segments just two years earlier. The unit sells GPUs for video gamers.
On a conference call with analysts, Kress elaborated on Nvidia’s response to the new restrictions.
She said the company is working with some important clients in China and the Middle East to obtain export licenses that would allow it to ship some of its high-performance products.
She said that the company is also working to develop new data centre hardware that complies with the latest US government policies and can be shipped to those regions without needing a license.
In its guidance, Nvidia said it’s looking at about $20 billion in revenue, implying growth of 231 per cent. It’s well above Wall Street’s forecast for fourth-quarter revenue of $16.38 billion.
Excluding today’s slight decline yesterday (which is more likely due to broader sharemarket woes), Nvidia’s stock is up 241 per cent in the year to date, well ahead of the more comprehensive S&P 500 Index’s 18 per cent gain.