|Here's Why Nvidia's Stock Is Booming—Again |
Nvidia’s move beyond gaming is still showing great results. Reporting better-than-expected revenue and profits for the last quarter of 2017 on Thursday helped push Nvidia’s stock price up as much as 10% on Friday morning. But with the overall market weak, the stock slipped back to a gain of 3% at midday.
Quarterly revenue rose 34% to $2.91 billion, versus analysts’ average estimate of $2.68 billion, and adjusted earnings per share of $1.72 were up 52% and much better than the $1.16 analysts expected.
But the best surprise as far as Wall Street was concerned was in the continued rapid adoption of Nvidia graphics cards in data centers, where they are used not for gaming but to run machine learning and related artificial intelligence apps. CEO Jensen Huang started selling the company’s latest and greatest Volta line of chips initially only for those corporate clients, making gamers wait to get their hands on the new technology until some unspecified date later this year.
Sending the limited supply of faster chips to the data center market paid off, as the $606 million of data center sales was double the previous year’s quarter and more than $50 million better than analysts expected on average. For the entire year, Nvidia (NVDA, -2.36%) brought in $1.9 billion in data center sales, up 133% from 2016. The unit should increase another 64% in 2018, analyst Romit Shah at Nomura, says.
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