Here's How NVIDIA Corp. Smashed Its Own Targets -- Again

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NVIDIA (NASDAQ: NVDA) posted a fresh earnings report after the closing bell on Thursday, covering the fourth quarter of fiscal year 2018. The maker of graphics processors and other high-performance number crunchers exceeded its own expectations by a country mile.

Nvidia's fourth-quarter results: The raw numbers

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What happened with Nvidia this quarter?

  • Data-center sales more than doubled year over year, landing at $606 million. The Volta processor family found lots of new business in the high-performance computing space, serving workloads like artificial intelligence, data analytics, and cloud-computing back-ends.
  • The flagship market of gaming chips saw revenues rising 29%, to 1.74 billion. Here, the growth drivers included holiday-season demand, the rising e-sports trend, and of course, a legion of cryptocurrency mining enthusiasts.
  • The automotive-computing market saw more subdued growth of 3%, adding up to $132 million.
  • Nvidia reported record-level GAAP gross margins in the fourth quarter, rising 1.9 percentage points over the year-ago period, to stop at 61.9%. The company achieved this milestone thanks to a more profitable sales mix and high interest in the lucrative GeForce series of gaming chips.
  • For the record, Nvidia's guidance for the fourth quarter pointed to GAAP earnings in the neighborhood of $1.08 per share on sales near $2.65 billion. The actual results left these projections firmly in the rearview mirror.

What management had to say

"Virtually every internet and cloud service provider has embraced our Volta GPUs," said Nvidia CEO Jensen Huang in a prepared statement. "Hundreds of transportation companies are using our NVIDIA DRIVE platform. From manufacturing and healthcare to smart cities, innovators are using our platform to invent the future."

Looking ahead

For the first quarter of fiscal-year 2019, Nvidia's management presented the following guidance targets:

  • Revenues should land near $2.9 billion, which would represent a 50% year-over-year increase.
  • The GAAP gross margin should continue to rise, even from its current record-level reading. Right now, 62.7% looks like a reachable first-quarter goal.
  • GAAP net income is expected to land near $920 million, up from $507 million in the year-ago period. That would lead to unadjusted earnings near $1.47 per share, up from $0.79 per share in the first quarter of 2018.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Nvidia. The Motley Fool has a disclosure policy.

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