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Graphics-Chip Maker Nvidia Beats First-Quarter Targets But Guides Low On Sales

Graphics-chip maker Nvidia late Wednesday beat Wall Street's targets for its fiscal first quarter but disappointed with its sales outlook for the current quarter. Nvidia stock fell in extended trading.

The Santa Clara, Calif.-based company earned an adjusted $1.36 a share on sales of $8.29 billion in the quarter ended May 1. Analysts polled by FactSet expected Nvidia earnings of $1.30 a share on sales of $8.12 billion. On a year-over-year basis, Nvidia earnings increased 49% while sales climbed 46%.

For the current quarter, Nvidia forecast sales of $8.1 billion, vs. analyst estimates for $8.4 billion. Nvidia cut its second-quarter revenue guidance by about $500 million due to the loss of business in Russia during that country's war with Ukraine and the impact of Covid lockdowns in China.

The company's implied guidance for adjusted earnings is $1.26 a share, Truist Securities analyst William Stein said in a note to clients. That's below analyst views for $1.36.

Nvidia Stock Drops After Report

In after-hours trading on the stock market today, Nvidia stock sank 7.4% to 157.22. During the regular session, Nvidia stock rose 5.1% to close at 169.75.

The company's gaming and data center businesses both topped Wall Street estimates in the first quarter. Gaming chip sales jumped 31% year over year to $3.62 billion. Data center revenue soared 83% to $3.75 billion.

"We delivered record results in Data Center and Gaming against the backdrop of a challenging macro environment," Chief Executive Jensen Huang said in a news release.

Nvidia is gearing up for a wave of new products in the second half of the year, Huang said. That includes new graphics processing units, central processing units, data processing units and robotics processors, he said.

"Our new chips and systems will greatly advance AI, graphics, Omniverse, self-driving cars and robotics, as well as the many industries these technologies impact," he said.

NVDA Stock Has Middling Composite Rating

Nvidia stock ranks No. 14 out of 34 stocks in IBD's fabless chipmaker industry group, according to IBD Stock Checkup. It has middling IBD Composite Rating of 65 out of 99.

IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge the strength of issues such as Nvidia stock. 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.