Nvidia – Earnings Review

The biggest semiconductor company in the world issued a warning about a decline in sales at its China division following the enlargement of US export restrictions, but it added that the effects would be more than compensated by robust growth in other areas.

Nvidia warned that the Biden administration's decision last month to broaden the restrictions on the export of advanced artificial intelligence chips to China would cause sales in the company's most important market to "decline significantly" in the current quarter.

According to the company, sales in China account for 20%–25% of Nvidia's main data centre business, making it susceptible to Washington's continuous efforts to restrict Beijing's access to AI resources.

This decline, according to a statement from Chief Financial Officer Colette Kress, "will be more than offset by strong growth in other regions."  The company predicted revenue of $20.00 billion for the fourth quarter of its fiscal year, give or take 2%; this exceeded $17.91 billion in analyst estimates from Investing.com.

Based on reports, Nvidia is already developing new processors designed exclusively for the Chinese market in an effort to get around performance regulations in the United States. Despite some observers' worries, the revised chips might still be prohibited by the U.S.

"We are collaborating with a few Chinese clients to apply for licences from the US government. In a conference call with analysts, Kress stated, "It is too early to tell whether these will be granted for any meaningful amount of revenue."

Nvidia's data centre division, which produces chips that support AI applications, generated $14.5 billion in revenue in the third quarter, a 279% increase in revenue from the previous year. Kress pointed out that the U.S. restrictions, which were announced close to the conclusion of the three-month reporting period that ended on October 29, had no "meaningful" impact on the outcome.

The company's total revenue hit a quarterly high of $18.1 billion, significantly exceeding analysts' projections of $16.2 billion, as Nvidia continued to profit from the recent surge in demand for AI-powered products. The $4.02 adjusted per-share income exceeded the $3.36 forecast.

(Sources: investing.com, reuters.com)