Graphics-chip maker Nvidia beat Wall Street's estimates for its fiscal fourth quarter and guided higher for the current period. NVDA stock jumped on the news on Thursday.
The Santa Clara, Calif.-based company late Wednesday said it earned an adjusted 88 cents a share on sales of $6.05 billion for the quarter ended Jan. 29. Analysts polled by FactSet had predicted Nvidia earnings of 81 cents a share on sales of $6.02 billion. On a year-over-year basis, Nvidia earnings dropped 33% while sales sank 21%.
Gaming chip sales remained weak in the fourth quarter, falling 46% year over year to $1.83 billion. However, data center chip sales rose 11% to $3.62 billion, fueled by cloud service providers investing in artificial intelligence technology.
In Nvidia's smaller business segments, professional visualization sales plummeted 65% to $226 million while automotive and embedded sales surged 135% to a record $294 million.
NVDA Stock Rises On Upbeat Report
For the current quarter, Nvidia forecast sales of $6.5 billion, down 22% from the same quarter last year. But that topped Wall Street's target of $6.31 billion for the first quarter.
On the stock market today, NVDA stock rocketed 14% to 236.64. During the regular session Wednesday, NVDA stock rose 0.5% to 207.54.
"AI is at an inflection point, setting up for broad adoption reaching into every industry," Chief Executive Jensen Huang said in a news release. "From startups to major enterprises, we are seeing accelerated interest in the versatility and capabilities of generative AI."
He added, "We are set to help customers take advantage of breakthroughs in generative AI and large language models. Our new AI supercomputer, with H100 and its Transformer Engine and Quantum-2 networking fabric, is in full production."
Meanwhile, the gaming chip market is recovering from a post-pandemic downturn, Huang said.
Nvidia Stock Gets Price-Target Hikes
More than 20 Wall Street firms raised their price targets on Nvidia stock after the company's earnings report.
"Generative AI has barely gotten started and Nvidia is already seeing a meaningful impact to its business, in terms of real demand, as well as its outlook," BMO Capital Markets analyst Ambrish Srivastava said in a note to clients. He rates NVDA stock as outperform with a new price target of 255.
Nvidia has an advantage in the artificial intelligence market by controlling the entire technology stack, BofA Securities analyst Vivek Arya said in a report. He rates NVDA stock as buy with a new price target of 275.
"Nvidia's unique, turnkey model of chips, systems and software coupled with the emerging inflection in generative AI and large language models positions Nvidia solidly for large, profitable growth," Arya said.
NVDA stock ranks ninth out of 34 stocks in IBD's fabless semiconductor industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 84 out of 99. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
