Nvidia
Overall, Nvidia's results track with the rest of the semiconductors sector who are seeing booming results. Semiconductors are considered a leading indicator for the technology sector, and its strength is a counter to many of the more pessimistically-oriented leading indicators.
Inside the Numbers
The company reported a fourth-quarter net income of $950 million which was a healthy beat over the previous year's quarter of $567 million. Analysts were looking for $925 million. Revenue came in at $3.1 billion which was above expectations of $2.9 billion. Nvidia's revenue returned to growth following multiple quarters of flagging sales. Data-center sales outperformed and made up for a slight miss in gaming revenue. The company posted $968 million in sales, while Wall Street was estimating $825 million.
Nvidia's beat is less surprising when considering that multiple companies have posted significantly strong results in their cloud segments like Microsoft
For the first quarter, Nvidia is forecasting revenue between $2.94 and $3.04 billion which was above analysts' consensus expectations of $2.85 billion. It's expecting a $100 million reduction in revenue due to the coronavirus outbreak. Around 30% of its gaming chips and 20% of data-center chips are sold to Chinese customers.
Looking Ahead
Nvidia gives investors exposure to some of the coming trends in technology including self-driving vehicles, artificial intelligence (AI), cryptocurrency, and virtual reality. For this one reason, it's one of the premier technology stocks. It's meaningful that the stock is breaking out to new highs and a positive sign for the technology sector.
Stocks that beat earnings with numerous analyst upgrades and upgraded guidance have a tendency to drift higher over the following weeks and months. It's likely that Nvidia follows this script as it's at the intersection of a number of trends, and the semiconductor cycle is just starting to emerge from a recent trough.
