What happened
Shares of Nvidia (NVDA 4.35%) fell in after-hours trading on Thursday, as investors responded to the chipmaker's lower-than-expected guidance. As of 6:40 p.m. ET, Nvidia's stock price was down more than 6% after rising 5% earlier in the day.
So what
Nvidia's revenue soared 46% year over year to $8.29 billion in its fiscal 2023 third quarter, which ended on May 1. This impressive growth was fueled by an 83% surge in data center sales, to $3.75 billion, and a 31% increase in gaming revenue, to $3.62 billion.
"We delivered record results in Data Center and Gaming against the backdrop of a challenging macro environment," founder and CEO Jensen Huang said in a press release. "The effectiveness of deep learning to automate intelligence is driving companies across industries to adopt Nvidia for AI computing."
Nvidia's data center business is booming. Image source: Getty Images.
Despite supply chain disruptions that have plagued the tech sector, Nvidia was able to manage its costs effectively. Its adjusted gross margin actually rose by 90 basis points (1 basis point equals 0.01%) to 67.1%. This, combined with Nvidia's strong sales growth, helped its adjusted operating income grow by 55% to $3.96 million. Its adjusted earnings per share, in turn, increased 49% to $1.36.
Now what
Investors, however, appeared to focus more on Nvidia's financial forecast for its fiscal 2023 second quarter. Management guided for revenue of roughly $8.1 billion, which was below Wall Street's estimates of more than $8.5 billion.
Nvidia noted that war in Europe and coronavirus-related lockdowns in China were likely to negatively affect its sales results by approximately $500 million. Still, Huang highlighted the company's promising slate of new offerings due out later this year, and he remains optimistic that powerful trends will continue to fuel Nvidia's long-term expansion. He said:
We are gearing up for the largest wave of new products in our history with new GPU, CPU, DPU, and robotics processors ramping in the second half. Our new chips and systems will greatly advance AI, graphics, Omniverse, self-driving cars and robotics, as well as the many industries these technologies impact.
Thus, patient, long-term-minded investors may wish to use the sell-off as an opportunity to buy the tech leader's shares at a discount.
