Nvidia Gives Bullish Forecast on Gaming, Data Center Demand

Nvidia Corp. gave a bullish forecast on robust demand for chips used by video gamers and data center operators.

Revenue will be about $5.3 billion in the period ending in April, the Santa Clara, California-based company said Wednesday in a statement. That compares with an average analyst estimate of $4.5 billion, according to data compiled by Bloomberg.

Nvidia stock rose about 3% in extended trading. The shares closed at $579.96 in New York earlier on Wednesday.

The chipmaker is enjoying a surge in orders for PC gaming gear from consumers stuck at home in the pandemic and looking for entertainment. Nvidia’s graphics chips are also important components in machines that run the code needed to create Bitcoins and other cryptocurrencies. The price of Bitcoin has soared in recent months.

Chief Executive Officer Jensen Huang has built on Nvidia’s strength in PC gaming graphics chips by taking the company into new markets such as artificial intelligence processing in data centers and components for autonomous vehicles.

Results from Nvidia, the largest U.S. chipmaker by market capitalization, are a barometer of confidence at some of the biggest tech companies. Cloud providers such as Google and Inc. use Nvidia graphics chips to help power some of the most widely used services on the internet. That business has been choppy lately, with spikes in orders followed by lulls as customers use up stockpiles of chips.

Data center chip sales jumped 97% to $1.9 billion in the fiscal fourth quarter from a year earlier. Revenue from gaming was $2.5 billion in the quarter, up 67% from the same period last year.

During previous run ups in the price of cryptocurrencies, Nvidia experienced surging demand followed by crashes sparked by price drops and the switch to more customized technology. The company has tried to minimize this volatility by offering different chips specifically for crypto mining. That reduces the risk that Nvidia’s gaming chips are dumped back into the market when crypto customers realized they don’t need them.

An increase in online activity and purchases of technology gear for working from home triggered a sharp rebound in chip demand last year. That caught some customers off guard, especially automakers. New orders flooded in and the global semiconductor supply chain is still trying to catch up. Nvidia outsources production to Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., which are swamped with orders. That’s limiting Nvidia’s ability to meet demand.

“Throughout our supply chain, stronger demand globally has limited the availability of capacity and components, particularly in Gaming,” Chief Financial Officer Colette Kress said in a statement posted on the company’s website.

Last September, Nvidia agreed to buy SoftBank Group Corp.’s chip division Arm Ltd. for $40 billion, in a bid to control of some of the most widely used electronics technology. The two are seeking regulatory approval around the world. Arm customers including Google, Microsoft Corp. and Qualcomm Inc. are worried about the deal and have urged antitrust officials to intervene.

Fiscal fourth quarter revenue rose 61% to $5 billion and profit excluding certain costs was $3.10 a share in the period, which ended Jan. 31, the company said. Analysts, on average, predicted earnings of $2.81 a share on sales of $4.82 billion.

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