It was another wild day on Wall Street, but this time it had a better ending. The Dow Jones Industrial Average (DJINDICES: ^DJI) was down 500 points in the early afternoon, rose to a gain of 500 points in the final hour, and finally closed up over 300 points. The S&P 500 (SNPINDEX: ^GSPC) rallied as well.
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Tech stocks rebounded after taking a beating earlier in the week, with the Technology Select Sector SPDR ETF (NYSEMKT: XLK) jumping 2.5%.
As for individual stocks, NVIDIA (NASDAQ: NVDA) reported yet another strong quarter, and Expedia (NASDAQ: EXPE) announced disappointing profits.
NVIDIA continues strong growth
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Chipmaker NVIDIA reported a record quarter that blew away its guidance and all expectations, thanks to booming sales of its number-crunching graphics processor chips, and shares jumped 6.7%.
Revenue for Q4 was up 34% to $2.91 billion, compared with guidance given three months earlier of $2.65 billion. GAAP earnings per share grew 80% to $1.78, while non-GAAP EPS of $1.72 far exceeded Wall Street expectations of $1.17. NVIDIA guided to revenue next quarter of $2.90 billion, exceeding the consensus analyst estimate of $2.48 billion.
The gaming business was strong, growing 29% to $1.74 billion, propelled by new video game titles over the holidays and the growth of esports. The company said that strong demand in the cryptocurrency market exceeded expectations, although the exact impact on revenue is hard to quantify. Data center revenue of $606 million was up 105% year over year as cloud providers snap up NVIDIA's chips for artificial intelligence and high-performance computing applications.
NVIDIA finds itself at the convergence of several big trends that produce an ever-growing demand for computing power: video games, artificial intelligence, virtual reality, big data, and autonomous vehicles. Results from the latest quarter suggest that investors' love affair with the stock may continue.
Expedia misses expectations
Online travel company Expedia reported fourth-quarter results that disappointed on both the top and bottom lines, and shares tumbled 15.5%. Revenue grew 11% to $2.32 billion and adjusted earnings per share fell 28% to $0.84. Analysts were expecting the company to earn $1.15 per share on revenue of $2.36 billion.
Gross bookings grew 14% to $19.8 billion, driven by an increase in international bookings of 26%, including 6 percentage points of foreign exchange benefit. Domestic bookings increased 7%. The company's HomeAway platform was a standout, with bookings that grew 47% compared with the quarter a year earlier, and for the year accounted for nearly 10% of the total. Room nights grew 15%, compared with 23% growth in Q4 of 2016.
Expenses that grew faster than revenue caused a 23% decline in operating income. The biggest increase was a $155 million boost in selling and marketing expense, which grew from 45.5% of revenue to 47.6%.
"We are now operating with a clear focus on our highest priority markets, making concentrated investments across the platform including a step function change in our pace of adding new properties to our marketplace," said CEO Mark Okerstrom in the press release. "These efforts combined with the impact of our ongoing cloud migration result in expectations for full year 2018 Adjusted EBITDA growth of 6% to 11%."
Expedia's top-line growth has slowed, but the profit number was the real surprise, as the company invests in global expansion and marketing. This was the first full quarter under Okerstrom's leadership, so investors will be waiting to see if his investment strategy pays off with renewed growth.
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