Strong growth in data center technology is helping Nvidia offset declines in its traditional graphics card business. Last quarter, sales fell less than analysts expected, and share temporarily rose 3% in after-hours trading. However, the declines were significant, particularly in the bottom line.
Revenue fell 17 percent year-on-year to $5.93 billion in the third fiscal quarter ending in October. Last year, high demand for chips brought Nvidia record sales and a jump in profits. The latest sales figures are also 12 percent lower than the previous quarter’s result, when Nvidia should have already posted a disastrous quarter.
Profits fell further. in the past three months Note nvidia Operating profit of $601 million. This is 20 percent less than it was in the previous quarter and even 77 percent less than it was in the same period last year. Net income was also down significantly year-over-year, down 72% to $680 million. Compared to the previous disastrous quarter, net income increased by four percent.
Data centers are good, graphics cards are bad
Developments in Nvidia’s two largest pillars have been going in opposite directions. The data center business grew 31 percent year-over-year to $3.83 billion. Although sales have slowed because the US has stopped exporting some chips to China, Nvidia has caught up with the delivery of other models.
In the case of graphics cards, sales fell 51% to $1.57 billion. On the one hand, the decisive factor was poor PC sales. On the other hand, the change in the Ethereum cryptocurrency has played a role. Graphics cards then became less useful to produce, and in some markets many users sold them as used. This has led to a drop in demand for new graphics cards, especially in the lower price range.
In addition, Nvidia recorded a significant increase in sales in the two compact segments, albeit at a much lower level. Here, year-over-year sales increased by 65 percent to $200 million. This is also up 60 percent from the previous quarter.
Cautious forecasts, investors warned
For the fourth fiscal quarter of fiscal 2023, which is just beginning, Nvidia expects total sales to be around $6 billion. That would be a drop of more than 20 percent from a year earlier, when Nvidia was able to celebrate its seventh consecutive record quarter thanks to an explosion in profits.
The stock market initially reacted positively with a small jump in prices. After dropping 4.5 percent earlier in the day, the share price rose 2 percent in after-hours trading. Over the course of this year, Nvidia stock has already fallen about 40 percent.