reported record quarterly revenue and profit, driven by demand for video games and cryptocurrency and despite a widespread semiconductor shortage.
The chipmaker on Wednesday posted net profit for its last quarter of $ 1.91 billion, more than double the figure for the previous year. Revenue rose 84% to $ 5.66 billion. Profits and revenues exceeded expectations, according to analysts polled by FactSet.
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Nvidia is the latest chip company to benefit from months of booming demand for computing power that has swelled order books. The hot market has caused shortages of some chips, affecting companies as diverse as Apple Inc.
and Ford Motor Co.
and contributing to President Biden’s recent appeal for $ 50 billion to strengthen the US semiconductor industry.
Santa Clara, Calif., Nvidia, which last year became the United States’ largest chip company by value, specializes in graphics processors that have soared off the shelves as people flocked to video games for entertainment during the coronavirus pandemic. The way these graphics chips work has made them popular for other applications as well, including performing artificial intelligence calculations and mining cryptocurrencies, which has further inflated demand.
Nvidia’s games division – its largest in terms of revenue – more than doubled sales in the quarter. Sales of its data center business grew 79% from a year ago to more than $ 2 billion. The main drivers of this record turnover were graphics cards for laptops and personal computers, said CFO Colette Kress. Demand for the cryptocurrency also aided results, she said, with some uncertainty over the extent of its contribution.
The company, Ms. Kress said, is still feeling the effects of supply constraints and expects this to continue into the second half of the year.
General Manager Jensen Huang said despite the supply issues, the company’s key businesses will continue to grow as gamers procure its high-performance graphics cards and data center customers make more use of artificial intelligence. .
“Our gaming business and our data center business is strong and growing,” he said in an interview. “We expect the second half of the year to be bigger than the first,” he said of the company’s sales outlook.
The company’s latest generation of graphics cards sold out so quickly that a secondary market emerged where scalpers were selling them at exorbitant prices. To help alleviate card shortages aimed at video game enthusiasts, Nvidia has taken the unusual step of adding software to cap its cryptocurrency mining performance. Nvidia hopes the move will inspire miners to buy new hardware intended for them instead.
Nvidia’s exposure to the cryptocurrency mining market has seen its ups and downs. The company suffered its worst quarterly revenue drop in nearly a decade during its fiscal fourth quarter two years ago after the cryptocurrency price crater, rendering mining unprofitable.
Huang is trying to expand Nvidia’s reach even further with the proposed acquisition of British chip designer Arm Holdings for $ 40 billion. The transaction has sounded the alarm among some competitors who fear that Nvidia will compromise the neutrality of Arm, which provides chip designs integrated into most of the world’s mobile phones. The UK government began a national security review of the deal earlier this year. Nvidia said on Wednesday that the proposed transaction is progressing and is expected to close before April 2022.
The company said it expected revenue of around $ 6.3 billion for the current quarter, beating Wall Street expectations. Sales are expected to grow sequentially in the current quarter in all markets, Ms. Kress said, primarily in the data center and gaming sectors.
Nvidia’s stock has grown by around 80% over the past year. To attract a wider range of investors, NVIDIA announced on Friday that its board of directors has declared a 4-for-1 stock split. The move still requires shareholder approval at the company’s annual meeting. scheduled for next week.
The company’s shares fell less than 1% in after-hours trading.
Write to Asa Fitch at [email protected]
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Appeared in the print edition of May 27, 2021 under the title “Videogaming, Crypto Demand Fuels Nvidia’s Strong Quarter”.