Nvidia forecasts sales above estimates, powered by data centre results

Nvidia forecasts sales above estimates, powered by data centre results

nVIDIA at the E3 2017 Electronic Entertainment Expo in Los Angeles
FILE PHOTO: The nVIDIA booth is shown at the E3 2017 Electronic Entertainment Expo in Los Angeles, California, U.S. June 13, 2017. REUTERS/ Mike Blake

REUTERS: Nvidia on Thursday (May 21) forecast second-quarter revenue above analysts' estimates, as demand surges for its chips used in the data centres that power the shift to working remotely because of the new coronavirus outbreak.

The company said the forecast includes a contribution from its US$6.9 billion purchase of Israeli chip firm Mellanox Technologies, which strengthened its data centre business.

The chipmaker said it expects current quarter revenue of US$3.65 billion, plus or minus 2 per cent, while analysts on average were expecting US$3.29 billion, according to IBES data from Refinitiv.

Shares rose 0.4 per cent in after-hours trading after the results were announced.

Much like rivals Intel Corp and Advanced Micro Devices Inc , Nvidia recorded a jump in demand for data center chips as companies invested to strengthen their IT infrastructure to support employees working remotely. Nvidia also said that sales to cloud computing companies drove its data center results.

Revenue rose 39 per cent to US$3.08 billion in the first quarter ended Apr 26, with the data center business recording its first US$1 billion quarter, the company said. Nvidia's data center business hit US$1.14 billion, up 80 per cent from a year earlier. The segment beat analyst estimates of US$1.07 billion, according to Refinitiv data.

Nvidia's data center chips power functions such as search suggestions, product recommendations and artificial intelligence work such as speech and image recognition.

But some of Nvidia's market segments were hurt by the pandemic. The company expects sales to automotive customers to fall 40per cent next quarter. But Nvidia CEO Jensen Huang said in an interview that some of those companies were also investing in robotics for the future, with Nvidia supplying the chips.

"The manufacturing companies are impacted, but they're racing to work on robotics technology so they can be less impacted in the future," Huang told Reuters.

Nvidia's net income rose to US$917 million, or US$1.47 per share, from US$394 million, or 64 cents per share, a year earlier.

Source: Reuters