Nvidia earnings crush Wall Street estimates again, company tempers China outlook

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Nvidia (NVDA) reported third quarter earnings after the bell on Tuesday that topped Wall Street’s expectations as the artificial intelligence hype cycle remains front and center for investors.

The chipmaker reported earnings per share of $4.02 on revenue of $18.12 billion, both of which topped analyst expectations. Analysts had expected earnings per share of $3.36 on revenue of $16.1 billion, per Bloomberg data.

The company’s revenue guidance for the current quarter came in at $20 billion, plus or minus 2%; analysts had been projecting fourth quarter guidance of $17.8 billion.

New restrictions on chip exports to China had been a concern entering the report and Nvidia CFO Colette Kress confirmed it will impact the company’s sales moving forward.

“Our sales to China and other affected destinations, derived from products that are now subject to licensing requirements, have consistently contributed approximately 20-25% of Data Center revenue over the past few quarters,” Kress said in a release.

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

The chipmaker reported data center revenue, which includes its AI chips, of $14.51 billion. The Street had expected revenue of $12.82 billion. Nvidia’s gaming revenue came in at $2.86 billion for the quarter also higher than the $2.7 billion analysts had projected.

Shares of the chipmaker were down about 1% after hours on Tuesday.

This report comes 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 ChatGPT maker OpenAI and his move to join Microsoft (MSFT).

Nvidia’s stock has moved significantly on earnings releases this year. In August, the stock hit an all-time high after Nvidia reported second quarter results that smashed Wall Street’s expectations on both revenue and earnings per share, as well as guidance that exceeded lofty estimates. Back in May, one analyst referred to the company’s forecast as “guidance for the ages.”

The print could have significant implications for the overall market, too. Nvidia has been a driver of momentum in the stock market this year as a key member of the “Magnificent Seven” stocks — along with 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 against a 6% rise for the remaining 493 stocks in the S&P 500.

Evercore ISI senior managing director Julian Emanuel noted on Sunday that “it’s still NVDA’s world,” and warned investors to be ready for “post-NVDA volatility” no matter which way the stock swings.

SUQIAN, CHINA - AUGUST 10, 2023 - Illustration Nvidia lost more than $52 billion in market value in one night, 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 Publishing via Getty Images)

Josh Schafer is a reporter for Yahoo Finance.

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