Nvidia Corporation (NASDAQ:NVDA) reported record earnings yesterday evening. Nvidia GPU sales exceeded expectations, with video gamers, data centers and cryptocurrency miners leading the way in a big holiday quarter. NVDA stock spiked in after hours trading, and while it’s seen some profit-taking Nvidia stock is soaring this morning.
Nvidia Earnings Set New Records
NVDA stock fell through the day on Thursday. But in the evening the company reported Q4 earnings that quickly erased that loss and then some.
Nvidia earnings for Q4 were $2.91 billion. That’s a 34% increase year-over-year and a solid 10% gain over Q3. Nvidia also reported its full Fiscal 2018 yearly revenue and it was even more impressive, up 41% over fiscal 2017, with full-year GAAP earnings per share up 88% on the year.
In a press release, Nvidia’s CEO Jensen Huang made a statement:
“We achieved another record quarter, capping an excellent year. In a powerful sign of our progress, attendees at NVIDIA’s GPU Technology Conferences reached 22,000, up tenfold in five years, as software developers working in AI, self-driving cars, and a broad range of other fields continued to discover the acceleration and money-saving benefits of our GPU computing platform.”
In after hours trading, Nvidia shares climbed as high as $247.85 — a 14% increase from the Nvidia stock close on Thursday afternoon.
Firing on All Cylinders
Nvidia’s GPU business is firing on all cylinders. The company reported a series of AI partnerships incorporating its high-end GPUs in data centers. Its share of video cards among Steam PC video game players hit 86%, while its powerful Titan XP video card aimed at the high-end gaming market was released in Star Wars-themed collectors editions.
Nintendo Co., Ltd (ADR)’s (OTCMKTS:NTDOY) huge Switch-fueled holiday quarter? Nvidia is in on that too. Nvidia’s Tegra GPU powers Nintendo’s hot selling game console, further adding to Nvidia earnings.
The company also touted Nvidia GPU sales in the automotive market, including its Nvidia Drive platform and a newly announced partnership with Continental to use Nvidia technology in a fully AI-powered, Level 5 self-driving vehicle planned for 2021.
A Note on Cryptocurrencies
You’ll notice that in the press release, Nvidia’s CEO made no mention of cryptocurrency mining. Nvidia and its rival Advanced Micro Devices, Inc. (NASDAQ:AMD) have a complicated relationship with those who mine Bitcoin and other crytocurrencies using rigs equipped with their video cards. Without a doubt, cryptocurrency mining has boosted GPU sales. The business is looked at as being semi-legitimate, however, and it has reduced the supply of video cards available for core markets, including video gamers.
In its earnings call, Nvidia noted that sales to cryptocurrency miners increased in the quarter, but was “difficult to quantify.” The company noted it is continuing to work to increase supply of its video cards and is working with retailers to focus their sales efforts on gamers, not the cryptocurrency market.
Bottom Line for NVDA Stock
The near future is also looking good for Nvidia earnings, adding more fuel to NVDA stock.
Where analysts were expecting revenue guidance in the $2.46 billion range for Q1, Nvidia says it is expecting to see $2.9 billion –plus or minus 2%. In addition, the company says U.S. tax reform will see its tax rate drop to 12% (plus or minus 1%), down from 17%. That move already saved it $133 million in Q4.
With Nvidia GPU sales humming, demand continuing to outstrip supply and growth in its key markets, 2018 is showing signs of being a record year for the company, with continued upside for NVDA stock.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.