Nvidia’s revenue from data centres jumps 167% in the second quarter

Written by: Wajeeh Khan
August 19, 2020
  • Nvidia’s revenue from data centres jumps 167% in the second quarter.
  • The U.S. firm blew past experts' forecast for earnings and revenue in Q2.
  • The tech company is now expecting a revenue of £3.36 billion in fiscal Q3.

Nvidia Corporation (NASDAQ: NVDA) published a stronger than expected earnings report for the fiscal second quarter on Wednesday after the bell. The initial response to its quarterly figures was a slight drop in its stock in extended trading. Considering making an investment in the stock market? Here’s how you can buy shares online in 2020.

Nvidia expressed confidence on Wednesday as it revealed a 50% increase in its Q2 revenue as compared to the same quarter last year. In comparison, its revenue had jumped 39% in the fiscal first quarter on an annualised basis.

Nvidia’s Q2 financial results versus analysts’ estimates

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According to Refinitiv, analysts had predicted the company to post £2.79 billion in revenue in the second quarter. Their estimate for earnings per share (EPS) was capped at £1.50 per share. In contrast, Nvidia blew past both forecasts as it printed a higher £2.95 billion of revenue and £1.66 of adjusted earnings per share in Q2.

The technology company boasted to have generated a revenue of £1.26 billion from its gaming segment that represents a 26% year over year growth. Experts had anticipated a much lower £1.08 billion of revenue from this segment.

For the first time in its history, the American multinational saw its data centre business generating a higher quarterly revenue than its gaming segment. Revenue from data centres printed at £1.34 billion that marked an unprecedented 167% increase versus the year-ago figure. As per FactSet, analysts were expecting £1.31 billion in revenue from this segment.

Nvidia attributed the jump in data centres revenue to its Mellanox acquisition that it completed in the recent quarter for £5.34 billion. Mellanox made up 14% of its total revenue in Q2.

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Nvidia’s guidance for the fiscal third quarter

For the fiscal third quarter, the Santa Clara-based company is now expecting a revenue of £3.36 billion (46% annualised growth). Analysts, on the other hand, forecast a lower £3.03 billion of revenue for Nvidia in Q3.

Its smaller rival, Analog Devices, also revealed its Q3 net income to have remained unchanged from last year on Wednesday.

Including the price action in after-hours trading, shares of the company are now exchanging hands at £370 per share. The stock had started the year 2020 at a per-share price of £183. At the time of writing, the £228 billion company has a price to earnings ratio of 90.65.