NVIDIA Q3 Figures: "Demand for GPUs Continues to Exceed Supply" - Raymond James
Wall Street forecasts were clearly exceeded. However, the group expects negative effects in the following quarter due to export restrictions.
NVIDIA shares were down by around 1.7% in early trading on Tuesday, November 22, after the chip company published its results for the third quarter the previous day. Wall Street's forecasts were clearly exceeded. However, the group expects negative effects in the following quarter due to export restrictions, which are likely to affect sales to companies in China and other countries. Sales to China and other affected destinations could fall significantly in Q4. However, the decline should be more than offset by strong growth in other regions, commented CFO Colette Kress on the figures. NVIDIA is trying to develop new data center products that comply with government guidelines and do not require licenses.
The company's results compared to the consensus of LSEG (formerly known as Refinitiv)
- Revenue: $18.12 billion (+206% year-over-year) vs. expected $16.18 billion
- Earnings (non-GAAP): $4.02 per share vs. expected $3.37 per share
Revenue in the data center segment skyrockets
Data center revenue climbed by 279% year-over-year to $14.51 billion. The StreetAccount consensus had been $12.97 billion.
- NVIDIA HGX H200 with the new NVIDIA H200 Tensor Core GPU was announced. The first GPU with HBM3e memory, with systems expected to be available in Q2 of the following year.
- Launch of an AI Foundry service to accelerate the development and tuning of custom generative AI applications, available for the first time on Microsoft Azure, with SAP and Amdocs among the first customers.
- NVIDIA GH200 Grace Hopper superchips including a new quad configuration would power over 40 new supercomputers at the Jülich Supercomputing Center and Isambard-AI at the University of Bristol.
- Partnerships have been formed with a number of leading companies in AI initiatives, including Amdocs, Dropbox, Foxconn and Infosys.
Large language model startups, internet companies and global cloud service providers have been the pioneers, and according to Jensen Huang, CEO of NVIDIA, the next waves are already emerging. Enterprise software companies are adding AI co-pilots and assistants to their platforms, while corporations are developing customized AI to automate the world's largest industries.
Demand for GPUs continues to exceed supply as the integration of AI expands across all industries, said Srini Pajjuri and Jacob Silverman of Raymond James. The analysts are not overly concerned about competition and predict that NVIDIA is likely to retain a market share of over 85% in Gen AI accelerators in the coming year.
Expectations were also exceeded in the gaming segment
Quarterly sales in the gaming segment amounted to $2.86 billion. This corresponds to year-on-year growth of 81% and is higher than the StreetAccount consensus of $2.68 billion.
- The so-called "DLSS 3.5 Ray Reconstruction" was introduced, which generates high-quality ray tracing images for intensive ray tracing games and applications including Alan Wake 2 and Cyberpunk 2077.
- Release of TensorRT-LLM for Windows, which would speed up LLM inference on the device by up to 4x.
- Passed the 1,700 game mark on GeForce Now, including the launch of Alan Wake 2, Forza Motorsport and Cyberpunk 2077.
Mercedes-Benz uses the NVIDIA Omniverse for the creation of digital twins
Professional Visualization revenue climbed by 108% to $416 million.
- It was announced that Mercedes-Benz was using the NVIDIA Omniverse to create digital twins for the planning, design, construction and operation of manufacturing and assembly plants.
Automotive segment grows slightly
Sales in the "Automotive segment" amounted to $261 million in the third quarter. This corresponds to an increase of around 4% compared to the previous year.
- The collaboration with Foxconn for the development of next-generation e-cars was further expanded for the global market.
Continued strong sales growth expected in the 4th quarter
For the 4th quarter of fiscal year 2024, NVIDIA expects sales of around $20 billion (plus minus 2%). This would correspond to revenue growth of almost 231%. The GAAP and non-GAAP gross margin is expected to be 74.5% and 75.5% respectively (plus minus 50 basis points).
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