Still reeling from the fallout of the cryptocurrency boom, Nvidia Corporation (NASDAQ: NVDA) managed to defy the odds during its fiscal second quarter with earnings and revenue that came in higher than expected. The chipmaker’s stock rallied sharply on Friday, recouping all of the prior losses for the month of August.
Q2 Earnings Summary
- Earnings: $1.24 per share, excluding certain items
- Revenue: $2.58 billion
Nvidia generated $2.58 billion in revenue during its fiscal second quarter, which ended July 28. That was 17% lower than a year ago but still higher than the median estimate of $2.54 billion, the company reported Thursday evening.
Excluding certain items, per-share earnings came in at $1.24, higher than the $1.15 expected.
The company’s automotive segment, which produces the Tegra processor, generated a record $209 million in revenues last quarter. That represents a gain of 30% year-over-year.
By comparison, Nvidia’s professional visualization unit grew just 4% annually. Gaming, data centre, and OEM services all fell on a year-over-year basis.
The decline in gaming was the most pronounced: The segment generated 27% less revenue compared with last year. Still, it accounts for just over half of company-wide sales at $1.31 billion.
Nvidia’s management team pointed to improvements for its fiscal third quarter, but guidance was lower than expected. The company expects to generate $2.90 billion in revenues in Q3 compared with analysts’ expectations for $2.97 billion.
NVDA Stock Rallies
Shares of Nvidia popped after the bell on Thursday and extended their rally into regular hours on Friday. NVDA headed into the weekend on a gain of 7.3%, closing at $159.56. The stock rose another 0.1% in after hours trading.
Nvidia has been under pressure for much of 2019 as the U.S. and China engaged in a tit-for-tat trade war that targeted chipmakers more than any other sector. NVDA eclipsed $192 a share in April before nosediving all the way down to $134 in early June. The stock participated in Wall Street’s summer melt-up before declining sharply at the start of August.
All said, NVDA is up more than 19% year-to-date, putting it virtually on par with the Nasdaq Composite Index.
At current values, Nvidia has a total market capitalization of $97.2 billion.
Trade-war risks notwithstanding, Nvidia continues to dominate the high-end PC gaming market. The company told shareholders there’s reason to be optimistic about a return to normalcy in the latter half of the year as supply issues are resolved. Nvidia is also capitalizing on growing demand for Nintendo products, which contain Nvidia graphics cards and the Tegra X1 system chip.
Disclaimer: Author holds no investment position in Nvidia at the time of writing.