[Overseas Stocks Spotlight] "NVIDIA, Gaming and Data Center Drive Earnings Surprise"

Published 21 Nov.2020 09:09(KST)

[Asia Economy Reporter Eunmo Koo] NVIDIA (NVDA US) recorded an earnings surprise in the third quarter, driven by strong performance in its dual pillars of gaming and data center products.

NVIDIA's revenue for the third quarter of fiscal year 2021 (August to October) reached $4.7 billion, a 56.8% increase compared to the same period last year, and operating profit rose 50.8% to $1.4 billion. Both revenue and operating profit exceeded market consensus.

Junseop Kim, a researcher at KB Securities, stated in a report on the 21st that the main reason for surpassing market expectations was the expansion of sales in gaming and data centers. Gaming revenue was $2.27 billion (consensus $2.06 billion), up 37% year-over-year, while data center sales reached $1.9 billion (consensus $1.8 billion), a 162% increase. Despite this, expenses met market expectations, resulting in an operating profit of $1.4 billion. The gross margin improved by 1.4 percentage points to 65.5%, compared to 64.1% in the same period last year.

NVIDIA forecasts fourth-quarter revenue to be around $4.8 billion (range $4.7 billion to $4.9 billion) and expects the gross margin to remain similar to the third quarter at 65.5%. This surpasses the market's revenue consensus of $4.5 billion and aligns with the gross margin consensus of $3 billion.

Risk factors include stagnation in investments by hyperscaler data centers following the COVID-19 pandemic, direct development of computing accelerators by customers, and shifts in the dominance of information processing related to autonomous vehicles.