The recent fiscal fourth-quarter results of Nvidia ( NVDA -4.29% ) topped expectations on the top and bottom line. Its powerhouse data center and gaming sectors easily exceeded analyst forecasts, allowing the tech stock to provide strong guidance for the coming quarter. But the stock still fell.
Nvidia said revenue hit a record $7.6 billion in the fourth quarter, a 56% jump year over year, generating record earnings of $1.18 per share, double what they were last year. Full-year results were also record-breaking.
Shares of the chipmaker dropped 7.5% the day after its earnings release and finished out the week nearly 11% below where it had traded just before the financial report. Some analysts attributed it to concern over Nvidia’s margin guidance for the next quarter not being more, others to the announcement it had withdrawn from its $40 billion acquisition of Arm Holdings, though there was the mounting belief the deal would not go through because of regulator opposition.
Still, others said reduced demand for Nvidia’s cryptocurrency mining chips weighed. While the gaming segment is still Nvidia’s biggest moneymaker, producing quarterly revenue of $3.42 billion, or 37% more than it did in fiscal 2021, the data center business continues to enjoy explosive growth and now stands at $3.26 billion. That’s a 71% spike and an accelerated gain from the prior quarter, keeping it on track to become the largest segment Nvidia possesses.
The ongoing global computer chip shortage shows no signs of relenting anytime soon, boosting demand for Nvidia’s already popular chips. Nvidia’s outstanding inventory purchases and long-term supply obligations were $9 billion, a $2.54 billion year-over-year increase, and up from $6.9 billion just one quarter ago.
This is now the fourth consecutive quarter in which demand for Nvidia’s chips is growing at a better than 30% rate, and it’s now even surpassed the company’s revenue growth guidance, giving the chipmaker substantial future tailwinds.
Automotive and robotics is still just a tiny component of Nvidia’s business at the moment – only $125 million in revenue in the fourth quarter – but it’s one that has the promise to comprise a far larger percentage going forward.