Nvidia gives upbeat revenue forecast; Applied Materials sees supply-chain challenges By Reuters

By Eva Mathews, Akash Sriram and Jane Lanhee Lee

(Reuters) – Chipmaker Nvidia (NASDAQ:) Corp on Wednesday forecast current-quarter revenue above analysts’ estimates, banking on the strong demand for data centers.

Nvidia expects first-quarter revenue of about $8.1 billion, compared with analysts’ estimates of $7.29 billion, according to IBES data from Refinitiv.

“We are seeing exceptional demand for NVIDIA computing platforms,” Chief Executive Jensen Huang said in a statement. Data center revenue grew 71% to $3.26 billion in the fourth quarter.

Despite the strong results, Nvidia shares were down 2.5% in after-hours trading, and KinNgai Chan, analyst at Summit Insights Group, said the company’s sales to the crypto industry could be a concern.

“A meaningful part of its gaming sales do include crypto-mining which we think could be volatile. Our most recent industry check does indicate a significant weakness in crypto-mining demand,” said Chan.

Chan also said he was disappointed that Nvidia’s gross margin did not rise in the fourth quarter from the third, despite the datacenter business outgrowing other units.

The company said it sold $550 million in crypto-specific cards in fiscal 2022, and only $24 million in the fourth quarter. Fourth-quarter gaming revenue was a record $3.42 billion, up 37% from a year ago.

With tech firms venturing into the “metaverse” and a spike in demand for data centers, revenue is surging for Nvidia, the world’s largest maker of graphic and artificial intelligence chips, and for other chip makers.

Nvidia reported fourth-quarter revenue of $7.64 billion, a record, compared with estimates of $7.42 billion.

Nvidia’s net income rose to about $3 billion in the fourth quarter from $2.46 billion a year earlier.

The results come on the heels of SoftBank Group Corp’s collapsed deal to sell chip designer Arm to Nvidia. Worth up to $50 billion at current market prices, it would have been the largest-ever chip deal.

Meanwhile, supplier to chip makers Applied Materials Inc (NASDAQ:) also posted record quarterly revenue on Wednesday, driven by robust demand for its semiconductor-making equipment from customers including Samsung Electronics (OTC:) and Taiwan Semiconductor Manufacturing Company.

However, Applied Materials’ chief executive, Gary Dickerson, said the supply environment remains challenging and that the company is doing everything it can to deliver for customers. The company expected second-quarter revenue of $6.35 billion, marginally below analysts’ estimates, according to Refinitiv data.

“Since we are already close to being sold out for the year, we also have a positive growth outlook for 2023,” Dickerson told analysts on a conference call, adding that demand is very strong and spending on wafer fabrication equipment could reach $100 billion in 2022.

Applied Materials’ shares rose more than 3% in after-hours trading.