nvidia earnings

Nvidia (NYSE: NVDA) stock is trading higher in US premarket price action today. The company reported better-than-expected earnings for the fiscal fourth quarter of 2023 as AI offset the continued decline in gaming revenues.

Nvidia reported revenues of $6.05 billion in the quarter. While its sales fell 21% YoY, they were nonetheless higher than the $6.0 billion that analysts were expecting. During the fiscal third-quarter earnings call, the company guided for revenues of $6.0 billion at the midpoint.

Looking at the breakup of Nvidia’s fiscal fourth quarter revenues, the Data Center segment reported revenues of $3.62 billion, a YoY rise of 11%. During the fiscal year ending in January, the segment posted revenues of $15.01 billion.

Sales rose a massive 41% in the fiscal year and hit a new record. The segment also includes AI chips which have been a bright spot for the company.

NVIDIA Reported a Fall in Gaming Revenues

Nvidia’s Gaming revenues however fell 46% YoY to $1.83 billion. The segment’s revenues fell 51% in the fiscal third quarter as well. In the fiscal year, the Gaming segment’s revenues fell 27% to $9.07 billion.

There has been a slump in the segment which is hurting Nvidia as well as other companies with exposure to online gaming.

Meanwhile, in a positive sign, the segment’s revenues rose on a sequential basis in Q4. Commenting on the Gaming segment, NVDA CEO Jensen Huang, said, “Gaming is recovering from the post-pandemic downturn, with gamers enthusiastically embracing the new Ada architecture GPUs with AI neural rendering.”

The company’s Professional Visualization segment posted revenues of $226 million—a YoY fall of 65%. In the full year, the segment’s revenues fell 27% to $1.54 billion.

Meanwhile, as has been the case in recent quarters, the Automotive and Embedded segment was the fastest-growing business as sales rose 135% YoY to $294 million. In the full year, the revenues rose 60% to a record high of $903 million.

Nvidia sees the Automotive segment as a key growth driver. The automotive industry’s chip demand has spiked over the last few years as electric and autonomous cars use more chips than traditional cars.

Baidu Sees AI as a Key Growth Driver

Automotive companies as well as tech giants are focusing on autonomous driving and robotaxis.

Earlier this week, Baidu said that its autonomous ride-hailing service Apollo Go completed 561,000 rides in Q4 2022, which was 162% higher than the corresponding quarter in 2021. Notably, in late December Baidu started offering robotaxis during the night in Wuhan.

An internal note shows that Baidu is looking to launch its AI chatbot Ernie in March. In the note, Baidu CEO Robin Li said, “AI technology has reached a tipping point and all industries will inevitably go through transformation.”

Baidu sees AI as a key growth driver. There is a list of companies that are a play on AI.

Nvidia Also Sees Massive Potential in AI

Nvidia is also among the companies that benefit from growing investments in AI. In his prepared remarks, Huang said, “AI is at an inflection point, setting up for broad adoption reaching into every industry.”

He added, “From startups to major enterprises, we are seeing accelerated interest in the versatility and capabilities of generative AI.”

Notably, AI chatbots have been seeing good traction, and companies ranging from Microsoft, Google, Alibaba, and Baidu are investing rapidly in the business.

Nvidia believes that it is well-placed to capitalize on the AI opportunity. Huang said, “We are set to help customers take advantage of breakthroughs in generative AI and large language models. Our new AI supercomputer, with H100 and its Transformer Engine and Quantum-2 networking fabric, is in full production.”

The company said that would offer AI-as-a-service in partnership with leading cloud providers.

It added, “Customers will be able to engage each layer of NVIDIA AI – the AI supercomputer, acceleration libraries software or pretrained generative AI models – as a cloud service.”

Nvidia would provide more information about the AI capabilities at its upcoming GTC developer conference which is scheduled for March 23-24.

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