Nvidia Shares fall despite Strong Q1 Financial Results

Nvidia Corporation (NASDAQ: NVDA) reported its first quarter financial results for fiscal 2019. Despite reporting strong growth in both revenue and earnings as well as beating analysts’ estimates, shares fell by 2.1 percent shortly after the opening bell on Friday.

For the quarter, Nvidia reported revenue of $3.21 billion, increasing 66 percent year over year and topping analysts’ estimates of $2.9 billion. The company reported an adjusted EPS of $2.05, up 141 percent year over year and surpassing analysts’ estimates of $1.66.

Nvidia’s quarterly revenue was driven by its gaming and datacenter segments strong revenue growth. As usual, the gaming segment drove in majority of the company’s total revenue. Gaming revenue increase by $1.72 billion, growing 68 percent year over year,

Nvidia’s datacenter, which powers Amazon.com’s (NASDAQ: AMZN) Amazon Web Services, Microsoft Corp’s (NASDAQ: MSFT) Azure as well as Alphabet Inc’s (NASDAQ: GOOGL) Google Cloud, reported revenue of $701 million, growing 71 percent year over year.

“We had a strong quarter with growth across every platform,” said Jensen Huang, founder and chief executive officer of NVIDIA. “Our datacenter business achieved another record and gaming remained strong.

Nvidia Chief Financial Officer Colette Kress said in the earnings call that cryptocurrency demand was stronger than expected. The segment is part of its OEM business which reported $289 million in revenue. For the second quarter, Kress that crypto-related revenue is expected to be a third of the first quarter’s revenue.

Nvidia also introduced three new platforms within the first quarter, including its Project Clara, a medical imaging supercomputer. Other platforms included Isaac software development kit for robotics, which offers developers and researchers a variety of tools. And lastly, Arm, which will integrate Nvidia’s Deep Learning Accelerator to bring AI to various consumer electronics.

For the second quarter, Nvidia forecasts revenue of $3.1 billion, plus or minus two percent. The company expects non-GAAP income of $15 million, while operating expenses are expected to be $685 million.

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