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Nvidia shares fall despite earnings beat

Graphics chipmaker Nvidia saw its stock fall more than 7 percent on Thursday after it reported stronger-than-expected earnings for the second quarter of its 2018 fiscal year, which ended on July 31. The company will discuss the earnings report with financial analysts on a conference call at 5 p.m. Eastern time.

  • EPS: Excluding certain items, $1.01 in earnings per share vs. $0.70 in earnings per share as expected by analysts, according to Thomson Reuters.
  • Revenue: $2.23 billion vs. $1.96 billion as expected by analysts, according to Thomson Reuters.

In terms of guidance, the company said it expects to generate $2.35 billion in revenue, plus or minus 2 percent, in the third quarter of its 2018 fiscal year. Analysts were expecting guidance of $2.13 billion for the upcoming quarter, according to Thomson Reuters.

Strong reactions to earnings results are not unusual for Nvidia, which is popular with investors these days as the company has emphasized the importance of its graphics processing units for artificial intelligence. In May Nvidia stock rose more than 13 percent after the company released its earnings results for the previous quarter, beating estimates on both EPS and revenue. Ahead of earnings on Thursday Nvidia stock closed down more than 4 percent.

Revenue was up 56 percent year over year, with the company’s Datacenter revenue — including sales of GPUs to public cloud providers like Amazon Web Services — leading the way at 175 percent revenue growth. Gaming revenue was up 52 percent year over year.

Sentiment around Nvidia has continued to be generally positive since then. Last month Canaccord Genuity raised its estimates for Nvidia “yet again” as it sees continuing strength in the gaming and automotive markets.

The opportunity around cryptocurrency has caused some analysts to become more optimistic about Nvidia. Two months after Pacific Crest downgraded Nvidia stock, the company made a U-turn and raised the stock’s rating.

Nvidia’s next quarter could see gains as the company increases the sales of its Volta Tesla V100 GPUs, which will also be listed under the company’s Datacenter business — shipments of GPUs based on the Volta architecture have indeed begun, Nvidia said.

Volta is especially designed to accommodate AI workloads, not unlike Alphabet’s second-generation tensor processing unit (TPU), which will become available for anyone to use exclusively on Google’s public cloud. Meanwhile Intel has been cooking up chips that are more geared toward AI, and Microsoft said it’s working on an AI coprocessor for its HoloLens mixed reality headset.

In the quarter Nvidia did not receive revenue as a result of its patent license agreement with Intel. That deal wrapped up in the first quarter of the 2018 fiscal year, when revenue came out to $43 million, Nvidia said.

In May Softbank disclosed that it had taken a stake in Nvidia through its Vision Fund, sending Nvidia stock up 1.8 percent.

Nvidia stock — the best performing stock of the year, as CNBC’s Tae Kim noted on Wednesday — is up 55 percent since the beginning of the year, according to FactSet.

This is breaking news. Please check back for updates.

Source: Tech CNBC
Nvidia shares fall despite earnings beat

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