What: Shares of graphics chip company NVIDIA (NASDAQ:NVDA) soared on Friday following the company's third-quarter earnings report. NVIDIA handily beat analyst estimates for both earnings and revenue, and its guidance was well above expectations. At 12:30 p.m. Friday, the stock was up about 14%.

So what: NVIDIA reported quarterly revenue of $1.305 billion, up 7% year-over-year and $130 million higher than analysts were expecting. Revenue was driven mainly by NVIDIA's gaming business, which accounted for $761 million of revenue during the quarter, up 44% year-over-year.

Revenue from professional graphics cards slumped by 8% year-over-year to $190 million, while data center revenue fell by 9% to $82 million. Sales to OEMs and royalty revenue fell off a cliff, declining by 45% year-over-year to $192 million. NVIDIA has become far less reliant on OEMs over the past few years, and growing sales of gaming GPUs more than offset this decline. Automotive revenue, a big growth opportunity for NVIDIA, surged 52% year-over-year to $79 million.

Non-GAAP EPS came in at $0.46, up 18% year-over-year and a whopping $0.21 higher than analysts were expecting. Non-GAAP operating expenses rose by just 4% year-over-year while gross margin jumped by one percentage point, driving NVIDIA's profitability. NVIDIA expects fourth-quarter revenue of $1.3 billion, which represents year-over-year growth of about 4%. Analysts were expecting revenue of just $1.21 billion.

Now what: NVIDIA's strong performance and guidance are particularly notable due to the current state of the PC market. According to IDC, global PC shipments slumped by 10.8% during the third quarter. Other PC-centric companies, like rival Advanced Micro Devices (NASDAQ:AMD), suffered big year-over-year declines in sales during the third quarter due to this weak PC market.

While NVIDIA's OEM sales are suffering, strong sales of its gaming GPUs are driving revenue and profits higher. AMD launched a new slate of graphics cards toward the end of the second quarter, but based on NVIDIA's results, AMD's launch doesn't seem to be affecting NVIDIA's business. During the second quarter, NVIDIA's market share reached a record high of 82%.

Despite a terrible PC market, and despite weak performance in a couple of NVIDIA's segments, NVIDIA has managed a blowout quarter driven by gaming GPUs. Investors have sent the stock to a new 52-week high as a result.