Nvidia shares are up more than 20 percent this morning, as the company obliterated third-quarter earnings expectations yesterday and said its graphical processing units (GPUs) are poised for strong growth in multiple industries.
Gaming made up more than half of the company’s $2 billion third-quarter revenues. But other business are on the rise. The data center represented $240 million, triple the amount Nvidia saw a year ago. And automotive sales were up 61 percent year-over-year, at $127 million.
The “mega point,” as CEO Jen-Hsun Huang put it on yesterday’s earnings call, “is really the size of the industries we’re now able to engage. In no time in the history of our company have we ever been able to engage industries of this magnitude.”
In the data center, what excites Huang isn’t just the growth, but also the fact that Nvidia’s presence is normalizing. At first, GPUs appealed only to supercomputing applications. The chips have now spread into hyperscale data centers, and Huang expects them to continue pushing beyond the highest-end data centers.
That might help stabilize the company’s data center business. On the call, analyst Vivek Arya of Bank of America Merrill Lynch pointed out that Nvidia’s data center business has been lumpy; it’s set to double this year but grew 7 percent last year.
Part of what’s fueling the data center business is the increasing number of applications being built around AI and deep learning, Huang says. He sees opportunities in Internet of Things (IoT), search engines for enterprises, and in the general use of AI for business decisions. IBM has been talking about Watson in a similar fashion.
AI is also helping the company in the auto industry, where the company has a partnership with Tesla and is developing a computing platform for autonomous driving.
For its third quarter, which ended Oct. 30, Nvidia reported revenues of $2 billion, compared with $1.3 billion in the same quarter a year ago.
Net income was $542 million, or 83 cents per share, compared with $246 million, or 44 cents per share, a year ago.
Non-GAAP net income was 94 cents a share, blowing away the analyst estimate of 57 cents, according to Thomson Financial.
Earnings-call transcript provided by Seeking Alpha.