The NVIDIA Corporation (NASDAQ: NVDA) stock price rallied 10.6% after releasing its Q4 2022 earnings results, which were better than expected. The chip manufacturer generated revenues worth $6.5 billion, beating analysts' estimates of $6.35 billion. The company’s earnings per share (EPS) also surprised to the upside.
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However, the company reported a massive decline in gaming revenues compared to Q4 2021. Still, the gaming segment generated sales worth $1.83 billion, beating consensus estimates of $1.6 billion. The upbeat revenues and profits triggered the premarket rally in Nvidia stock.
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Investors were thrilled that the chip manufacturer benefited from the surging interest in Generative A.I., which requires significant computing power and could be the company's next growth frontier.
Moreover, the gaming segment, which had done exceptionally well during the pandemic period, is now correcting back to normal. The gamers who bought the latest and greatest gaming chips in 2020 and 2021 are not keen to upgrade their gear.
Jensen Huang, Nvidia’s CEO, said: “AI is at an inflection point, setting up for broad adoption reaching into every industry. From startups to major enterprises, we are seeing accelerated interest in the versatility and capabilities of generative AI.”
The company’s data center business revenue soared to $3.62 billion in Q4 2022, from $968 million in Q4 2019, due to the massive growth in demand for chips to power AI systems. Demand for chips to power AI systems is expected to keep increasing with time.
Nvidia also highlighted its AI cloud service offerings, where it is partnering with leading cloud service providers to offer AI-as-a-service, allowing enterprises to access its world-leading AI platform.
The company’s clients can use the cloud as a service model to engage each layer of NVIDIA AI, powered by the AI supercomputer, to access pre-trained generative AI models and acceleration libraries software.
Nvidia also expressed optimism that its gaming division was recovering from the post-COVID slump, which had seen revenues dip significantly. The firm recently introduced a new range of chips based on the Ada architecture GPUs with AI neural rendering
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Nvidia stock price.
The Nvidia stock price was trading up 10.62% at $229.59, from Wednesday’s closing price of $207.54.
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