NVIDIA Corp (NVDA)

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NVIDIA guidance stokes hopes on bottom in chip demand after Q4 results beat
By: Investing.com | February 22, 2023

NVIDIA reported on Wednesday guidance that stoked hopes that demand for chips has bottomed as the chipmaker delivered fourth-quarter results that topped Wall Street estimates, led by growth in its data center business despite the impact of weaker enterprise spending.

NVIDIA Corporation (NASDAQ:NVDA) shares rose 7% in after-hours trade following the report.

NVIDIA announced earnings per share of $0.88 on revenue of $6.05 billion. Analysts polled by Investing.com anticipated EPS of $0.81 on revenue of $6.01B.

Revenue in its gaming business fell 46% to $1.83B for the quarter year-on-year, while its data center business grew revenue 11% to $3.62B year-on-year in Q4.

The company, however, touted an ongoing recovery in gaming from the post-pandemic downturn, with “gamers enthusiastically embracing the new Ada architecture GPUs with AI neural rendering.”

Looking ahead to Q1, revenue is expected to be $6.50B, plus or minus 2%, with gross margins forecast to be 64.1%, plus or minus 50 basis points. Wall Street analysts were looking for Q1 revenue of $6.43B.

Investor sentiment on NVIDIA has been boosted recently as Wall Street anticipates demand for the chipmaker’s omniverse technology platform will be boosted by Facebook’s investment to build on its metaverse.

Sentiment on the chipmaker, which has seen its stock gain about 41% year-to-date, has improved since the turn of the year with some attributing the strength to expectations that the AI arms race in big tech will drive demand for chips.

Others, however, are less certain about how much the recent surge in interest in AI has driven near-term chip demand.

“While ChatGPT has highlighted the future potential for AI solutions (with Nvidia the clear leader in this space), we are less certain that its popularity has shifted the near-term demand for data center accelerators,” Wedbush said in a note.

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