Nvidia’s second quarter forecasts is based on expectations of a recovery in the gaming market. The mid-end gaming segment continues to be its growth driver.
Nvidia Corp has forecast its second-quarter revenues above Wall Street estimates as it expects the sales of its graphics chips to benefit from a recovery in the gaming market.
Apart from the gaming market, Nvidia is also increasing its footprint in growth sector such as artificial intelligence, data centers, and self-driving cars. Its key business segment however still remains graphics card for the video game industry.
“I think China has stabilized. There are some 300 million PC gamers in China and people are expecting it to grow,” said Nividia’s CEO Jensen Huang on a post-earnings conference call.
Revenue from its gaming chip business, which accounts for nearly half of Nvidia’s overall sales, rose by 11% to $1.05 billion in the fourth quarter, beating research firm Factset’s estimates of $933.5 million.
Nvidia expects continued growth in sales of its gaming laptops for 2019. It has forecast revenue of $2.55 billion, plus or minus 2%, for the current quarter; this is largely above analysts’ expectations of $2.53 billion, according to IBES Refinitiv data.
According to Kinngai Chan, an analyst for Summit Insights, the current quarter outlook was “better than feared” with the mid-end gaming segment continuing to be the growth driver. However, revenue from its data center business fell to $634 billion, missing analysts’ estimate of $663.7 million.
The company’s net income has also fallen to $394 million, equivalent to 64 cents per share, in the first quarter ended April 28 from $1.24 billion, or $1.98 per share, a year earlier.
Excluding items, Nvidia earned 88 cents per share, above 81 cents per share estimated by analysts.
Total revenue fell to $2.22 billion, but was still above analysts’ estimates of $2.20 billion.
With this news reaching the market, Nvidia’s shares were up by 1.5% at $162.61 in extended trading.
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