Nvidia beats Q2 2020 expectations with revenue up 50% to $3.87 billion

Nvidia posted revenues of $3.87 billion for the second fiscal quarter ended July 26, up 50% from a year earlier. The revenues beat expectations, and non-GAAP earnings per share of $2.18 also trounced expectations as gaming hardware and AI remained in high demand during the pandemic.

Santa Clara, California-based Nvidia makes graphics processing units (GPUs) that can be used for games, AI, and datacenter computing. While many businesses have been hit hard by the pandemic, Nvidia has seen a boost in those areas.

For the second fiscal quarter, analysts expected revenue of $3.65 billion and non-GAAP earnings per share of $1.97.

Gross profit margins, or the profit on products sold, were 66%, compared to 60.1% a year earlier. Nvidia’s revenues for the first quarter were $3.08 billion, up 39% from a year earlier.

Datacenter revenue was $1.7 billion, up 167% from a year earlier. Gaming revenues were $1.65 billion, up 26% from a year ago. Professional visualization was $203 million, down 30% from a year ago. Automotive revenue was $111 million, down 47%. Other revenue was $146 million, up 32%. Overall graphics was $2.08 billion, up 16%, while CPU and networking revenue was $1.78 billion, up 130%.

Nvidia’s stock is down 0.7% in after-hours trading to $482.55 a share.

Earlier this year, Nvidia completed its $7 billion acquisition of Mellanox Technologies, a maker of key technologies for connecting its chips in datacenters. Mellanox revenue is included in the CPU and networking segment.

Jensen Huang, CEO of Nvidia, said in a statement, “Adoption of Nvidia computing is accelerating, driving record revenue and exceptional growth. Growth in GeForce gaming accelerated as gamers increasingly immerse themselves in realistic virtual worlds created by Nvidia RTX ray tracing and AI.”

He added, “Our new Ampere GPU architecture is sprinting out of the blocks, with the world’s top cloud service providers and server makers moving quickly to offer Nvidia accelerated computing. Mellanox grew sharply, driven by the need for high-speed networking in cloud data centers to scale-out AI services.”

And he said, “Despite the pandemic’s impact on our professional visualization and automotive platforms, we are well-positioned to grow, as gaming, AI, cloud computing and autonomous machines drive the next industrial revolution around the world.”

Back in April, Nvidia launched its Ampere-based A100 GPU, an enormous AI chip with 54 billion transistors and a design based on a new generation of AI technology.

Above: Nvidia’s A100 chip has 54 billion transistors.

For the second fiscal quarter, Nvidia itself expected revenue of $3.65 billion and gross profit margins of 58.6% on a GAAP basis and 66% on a non-GAAP basis.

Nvidia is expected to unveil its high-end desktop GPUs based on Ampere at its event scheduled for September 1. Nvidia is also rumored to be considering a bid for Arm, which Japan’s SoftBank has reportedly put up for sale.

Nvidia chief financial officer Collette Kress said in a statement that COVID-19 continues to affect the business, with employees working from home. Customers in industries such as education, research, energy, automotive, manufacturing, architecture and media have been hit hard. Each is recovering but at different rates, Kress said.

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