NVIDIA Reports Strong Performance in Gaming and Data Center Sectors... "Continued Earnings Improvement Expected"

[Asia Economy Reporter Minji Lee] NVIDIA, the world's largest graphics processing unit (GPU) company, is expected to continue its performance improvement this year, driven by strong results in both the gaming and data center sectors.

According to the financial investment industry on the 28th, NVIDIA's revenue in the fourth quarter of last year reached $5 billion for the first time, marking a 61% increase compared to the same period last year. This figure exceeded market expectations of $4.82 billion. Earnings per share (EPS) rose 51% to $2.31 during the same period.

By segment, the gaming division recorded $2.5 billion, up 67% year-on-year, while the data center division grew 97% to $1.9 billion. ProViz posted $310 million, and the automotive division recorded $150 million, down 7% and 11%, respectively.

Although the gaming segment faced an inevitable decline in SoC shipments due to the end of the peak season for console devices, strong sales of discrete GPUs, NVIDIA's core business, and the launch of over 70 gaming laptops offset this decline. NVIDIA is expanding its graphics processing technology into various business areas including video games, Bitcoin mining, artificial intelligence computations, data centers, and autonomous vehicles.

Hyungtae Kim, a researcher at Shinhan Financial Investment, explained, "GPU supply shortages appear to have worsened due to a surge in cryptocurrency mining demand. Although the launch of Cryptocurrency Mining Processors (CMP) is planned, it will likely take longer than expected to stabilize supply and demand."

The data center segment was expected to see a decline due to Melanox's underperformance, but the adoption of the A100 in machine learning and data analytics lineups by major server OEMs, as well as its application in Google Hybrid Cloud and AWS Marketplace implementations, led to results exceeding market expectations. The network solutions (Mellanox) business contributed 10% of total revenue.

Guidance for first-quarter revenue next year is $5.3 billion, surpassing market expectations of $4.5 billion by 18%, maintaining the $5 billion level. While strong demand for gaming (RTX 30 series) continues, a faster-than-expected turnaround in the server market is anticipated. Although mining processors will account for only about 1% of total company revenue, they are expected to positively impact supply stabilization. Kyungmin Kim, a researcher at Hana Financial Investment, stated, "Opinions are mixed regarding the launch of cryptocurrency mining-specific products, but actively responding to mining GPU demand while managing risks is positive."

Expectations for business expansion through the acquisition of ARM Holdings remain valid. SoftBank Group, which agreed to sell ARM to NVIDIA, prefers NVIDIA as the acquiring party, and NVIDIA's strengthening cooperation with Chinese EV suppliers indicates a relatively favorable position within China as a U.S. company. Considering that NVIDIA succeeded in acquiring Mellanox despite intensified trade disputes and low acquisition success probability, the likelihood of the ARM acquisition should be taken seriously.

However, some opinions suggest that benefits from the Biden administration's executive orders will be limited. From a semiconductor industry perspective, the executive orders imply a multilateral approach to pressure China, semiconductor supply chain stabilization based on friendly relations with Taiwan and South Korea, and expansion of semiconductor manufacturing infrastructure in the U.S. Hana Financial Investment expects that beneficiaries among semiconductor index components will be limited to equipment companies that own manufacturing facilities or those expected to receive orders from foundry, memory, and analog semiconductor manufacturers expanding production.

Kyungmin Kim of Hana Financial Investment said, "As long as supply shortages in the supply chain persist, investor interest in companies like NVIDIA and Qualcomm, which handle design at the front end of the value chain, will remain limited for the time being."

This content was produced with the assistance of AI translation services.