Nvidia said new high-end graphics chips for video gamers are bringing its core business back to “normalised levels" and raising profitability, as the company posted quarterly results ahead of Wall Street targets.
However revenues fell 17 percent in the fiscal second quarter ended July 28 and net income fell by half from a year earlier, but results improved from the previous three months.
Chief Executive Jensen Huang said gaming laptops able to handle sophisticated games and artificial intelligence models able to handle real-time chat bots were driving demand. The new video game chips use so-called ray tracing technology, which creates pictures by calculating how light hits objects, and students returning to school are buying laptops with the high-end silicon.
Chief Financial Officer Colette Kress said Nvidia's business has normalised, and improving profit margins due to sales of the high-end gaming chips were expected.
The previous fiscal year set a sales record but came to what Huang at the time called a “disappointing finish” due to a slowdown in China and a bust in the market for crypto mining chips.
Nvidia said it would resume share buybacks after completing the acquisition of networking products maker Mellanox this year.
Total revenue in the second quarter fell 17 percent to $2.58 billion but topped Wall Street targets of $2.55 billion, according to IBES data from Refinitiv. Revenues rose by 16 percent from the previous quarter.
Revenue in the video gaming business fell 27 percent to $1.31 billion and beat analysts’ estimate of $1.28 billion, based on an average of five analysts. Sales at the automotive unit rose 30 percent to $209 million in the quarter. Analysts expected $175 million.
Data centre revenue, which has been an area of concern, fell 14 percent to $655 million, just behind the $671 million consensus.
The company said it expects third-quarter revenues of $2.9 billion. Analysts on average were expecting revenue of $2.97 billion, according to IBES data from Refinitiv.
Nvidia’s net income fell 50 percent to $552 million in the fiscal second-quarter.