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Nvidia Profits Smash Wall Street Estimates Again, Company Tempers China Outlook

Nvidia (NVDA) reported third-quarter results after the bell Tuesday that once again beat Wall Street expectations, as the artificial intelligence boom continues to fuel demand for the company’s chips .

The chipmaker reported adjusted earnings per share of $4.02 on revenue of $18.12 billion, both above analysts’ expectations. Analysts had expected adjusted earnings per share of $3.36 on revenue of $16.1 billion, according to Bloomberg data.

The company’s revenue forecast for the current quarter also beat estimates, coming in at $20 billion, plus or minus 2%; analysts were forecasting a fourth-quarter forecast of $17.8 billion.

The stock market’s reaction to the results was muted, however, as the company noted that new restrictions on chip exports to China would weigh on results.

“Our sales in China and other relevant destinations, derived from products now subject to licensing requirements, have consistently contributed approximately 20-25% of data center revenues over the past few quarters,” said Colette Kress , CFO of Nvidia, in a press release.

“We expect our sales to these destinations to decline significantly in the fourth quarter of fiscal 2024, although we believe this decline will be more than offset by strong growth in other regions.”

Third-quarter revenue increased 34% from the previous quarter and 206% from last year, reflecting how increased demand for AI has driven the company’s sales throughout long from 2023.

The chipmaker reported revenue of $14.51 billion for its data centers, which includes its AI chips; the street had forecast revenue of $12.82 billion for this segment.

Nvidia’s gaming revenue was $2.86 billion for the quarter, also higher than the $2.7 billion expected by analysts. Shares of the chipmaker were down about 1% in after-hours trading Tuesday.

This report came after the stock closed at a record high of $504.09 per share on Monday, with AI once again becoming the story of the moment for investors amid the ongoing drama surrounding Sam Altman’s departure from the maker of ChatGPT OpenAI and its decision to join Microsoft (MSFT). Nvidia stock fell about 0.9% Tuesday ahead of the results along with the broader market.

Earlier this year, Nvidia stock saw a notable move following the earnings release.

In August, the stock hit a record high after Nvidia reported second-quarter results that beat Wall Street’s expectations for revenue and earnings per share, as well as beating high estimates. Last May, an analyst called the company’s forecast “advice for the future.”

Printing could also have significant implications for the entire market. Nvidia has been a driver of stock market momentum this year as a key member of the “Magnificent Seven” stocks — alongside Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN) , Meta (META) and Tesla (TSLA).

Together, these stocks have gained more than 70% this year through mid-November, compared with a 6% rise for the remaining 493 stocks in the S&P 500.

Julian Emanuel, chief executive of Evercore ISI, noted Sunday that “it’s still NVDA world” and warned investors to prepare for “post-NVDA volatility” regardless of how stocks perform.

SUQIAN, CHINA - AUGUST 10, 2023 - Illustration Nvidia lost more than $52 billion in market value overnight on August 10, 2023, Suqian, Jiangsu Province, China.  (Photo credit should read CFOTO/Future Publishing via Getty Images)

The Nvidia logo under a magnifying glass. (CFOTO/Future Publishing via Getty Images) (Future publication via Getty Images)

Josh Schafer is a reporter for Yahoo Finance.

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