Nvidia Posts Record Earnings on Videogaming, Cryptocurrency Demand -- 2nd Update
27 May 2021 - 8:22AM
Dow Jones News
By Asa Fitch
Nvidia Corp. reported a record quarterly revenue and profit,
propelled by demand for videogaming and cryptocurrency and despite
a broad-based shortage of semiconductors.
The chip maker on Wednesday posted net income for its most
recent quarter of $1.91 billion, more than double the year-prior
figure. Revenue rose 84% to $5.66 billion. Both profit and revenue
exceeded expectations, according to analysts surveyed by
FactSet.
Nvidia is the latest chip company to have enjoyed months of
booming demand for computing power that has padded order books. The
hot market has triggered shortages of some chips, affecting
companies as varied as Apple Inc. and Ford Motor Co. and
contributing to President Biden's recent call for $50 billion to
strengthen the U.S. semiconductor industry.
Santa Clara, Calif.-based Nvidia, which last year became the
U.S.'s biggest chip company by value, specializes in graphics
processors that have flown off shelves as people flocked to
videogaming for entertainment during the coronavirus pandemic. The
way those graphic chips work has also made them popular for other
applications, including performing artificial-intelligence
calculations and mining cryptocurrencies, further inflating
demand.
Nvidia's gaming division -- its largest in terms of revenue --
more than doubled sales in the quarter. Sales for its datacenter
business advanced 79% from the year earlier to more than $2
billion. The main drivers behind the record revenue were graphics
cards for laptops and personal computers, said financial chief
Colette Kress. Cryptocurrency demand also aided results, she said,
with some uncertainty as to the extent of its contribution.
The company, Ms. Kress said, is still feeling the effects of
supply constraints and expects that to continue into the second
half of the year.
The company's latest generation of graphics cards sold so
quickly that a secondary market emerged where scalpers offered them
at inflated prices. To help alleviate shortages of cards intended
for videogamers, Nvidia has taken the unusual step of adding
software to cap their cryptocurrency mining performance. Nvidia
hopes the move spurs miners to instead buy new hardware targeted at
them.
Nvidia's exposure to the cryptocurrency-mining market has had
its up and downs. The company suffered its worst quarterly revenue
decline in almost a decade in its fiscal fourth quarter two years
ago after cryptocurrency prices cratered, making mining
unprofitable.
Chief Executive Jensen Huang is trying to broaden Nvidia's focus
even further with the proposed acquisition of British chip designer
Arm Holdings for $40 billion. The transaction has raised alarm
among some rivals who worry that Nvidia would compromise the
neutrality of Arm, which supplies chip designs that go into most of
the world's mobile phones. The U.K. government began a
national-security review of the deal earlier this year. Nvidia on
Wednesday said the proposed transaction was making headway.
The company said it expected revenue of around $6.3 billion for
the current quarter, topping Wall Street's expectations.
Nvidia's stock has risen roughly 80% over the past year. To make
itself appealing to a broader range of investors, Nvidia on Friday
said its board 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 asa.fitch@wsj.com
(END) Dow Jones Newswires
May 26, 2021 18:08 ET (22:08 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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