Nvidia’s Earnings Are Today. What to Expect.

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Graphics chip giant

Nvidia

is expected to post strong financial results Wednesday for its latest quarter, including surging revenue and net income.

Originally primarily a provider of graphics chips for gaming applications, the company’s portfolio has broadened to include chips used for servers, in particular for artificial intelligence, and for autonomous driving, visualization, cryptocurrency mining and mobile applications. in doing so, Nvidia (ticker: NVDA) has eclipsed

Intel

(INTC) as the top chip maker in the U.S.

On Tuesday, Nvidia shares jumped 8.3% to $262.76, aided by positive comments on the outlook for data center spending on Monday afternoon’s earnings report from the networking hardware provider Arista Networks (ANET).

For the fourth quarter ended Jan. 31, Nvidia has projected revenue of $7.4 billion, which would be up 48% from the year-earlier quarter, and about 4% above the October-quarter level. Street consensus calls for adjusted profits of $1.23 a share, up from 78 cents a year ago, and $1.17 in the fiscal third quarter. Nvidia projected non-GAAP gross margin in the quarter of 67%. Nvidia will report after the close Wednesday.

For the April quarter, the Street sees revenue of $7.3 billion and adjusted profits of $1.19 a share.

For the quarter, most of the revenue will come from two primary segments: Gaming, projected to be $3.4 billion in the quarter, and data center, with an estimated $3.2 billion.

Wedbush analyst Matt Bryson wrote in a research note previewing the quarter that Nvidia is likely to post “another strong quarter and guide.” But he maintains a Neutral rating on the shares, citing concerns about valuation. One key question is how the company, which relies on contract manufacturers to produce its chips, was affected in the quarter by ongoing semiconductor industry supply constraints.

“We expect another quarter of data center upside, with the magnitude of growth likely continuing to be dictated by supply challenges rather than any shortage of end demand,” Bryson writes. “And we would expect guidance will also be robust, with a strong likelihood that Nvidia does not forecast a seasonal dip in sales as anticipated by Street numbers.”

Citi analyst Atif Malik writes in a research note that he thinks investor focus will be on data center growth, the state of supply constraints and gaming demand outlook for 2020. He contends that data center trends should “remain solid” in 2022, as artificial intelligence and machine learning remain in the early innings. 

Write to Eric J. Savitz at [email protected]