Nvidia’s Q3 revenues rise 57% to $4.73 billion as gaming and datacenters stay strong

Nvidia reported revenues of $4.73 billion for its third fiscal quarter ended October 25, up 57% from a year earlier. The revenues and non-GAAP earnings per share of $2.91 beat expectations as new gaming hardware and AI products generated strong demand.

A year ago, Nvidia reported non-GAAP earnings per share of $1.78 on revenues of $3.01 billion. The Santa Clara, California-based company makes graphics processing units (GPUs) that can be used for games, AI, and datacenter computing. While many businesses have been hit hard by the pandemic, Nvidia has seen a boost in those areas.

Analysts expected Nvidia to post earnings of $2.57 a share on revenue of $4.41 billion.

During the quarter, Nvidia launched its 3000 series of GeForce RTX graphics cards with real-time ray tracing, helping the PC maintain its graphics competitiveness in the face of new gaming consoles from Microsoft and Sony. Our own Jeff Grubb said the new Nvidia graphics card was more exciting than the consoles. In an analyst call, Nvidia CEO Jensen Huang said the company will continue to ramp fast with the 3000 series and called it one of their best launches ever.

Datacenter revenue was $1.9 billion for the quarter, up 162% from a year earlier, while gaming revenues were $2.27 billion, up 37% from a year ago. Although datacenter revenue was bigger in the previous quarter, Nvidia’s gaming revenue was bigger this time.

On the negative side, professional visualization was $236 million, down 27% from a year ago. Also down was automotive revenue at $125 million, a 23% drop.

Nvidia’s stock is down slightly at $536.25 a share in after-hours trading.

Earlier this year, Nvidia completed its $7 billion acquisition of Mellanox, which makes key technologies for connecting chips in datacenters. Mellanox revenue is included in the CPU and networking segment.

Above: Fortnite is getting second-generation real-time ray tracing.

Image Credit: Nvidia/Epic

Nvidia is also talking with regulators to get approval for its $40 billion acquisition of Arm. It took Nvidia a long time to gain approval to purchase Mellanox, so these talks can drag out. To help get approval for the Arm acquisition, Nvidia says it will keep Arm’s employees in place and hire more people to create a world-class AI lab in Cambridge, England.

Huang struck a positive tone, saying in a statement that the company is firing on all cylinders and hit record revenues in gaming, datacenter, and overall categories.

“The new Nvidia GeForce RTX GPU provides our largest-ever generational leap, and demand is overwhelming. Nvidia RTX has made ray tracing the new standard in gaming,” he said.

Regarding AI, he said, “We are continuing to raise the bar with Nvidia AI. Our A100 compute platform is ramping fast, with the top cloud companies deploying it globally. We swept the industry AI inference benchmark, and our customers are moving some of the world’s most popular AI services into production, powered by Nvidia technology.”

Back in April, Nvidia launched its Ampere-based A100 GPU, an enormous AI chip with 54 billion transistors and a design based on a new generation of AI technology. On Monday, Nvidia launched a new 80GB version.

For the fourth fiscal quarter, Nvidia said it expects revenue of $4.8 billion and non-GAAP gross profit margins of 65.5%.

Moor Insights & Strategy analyst Patrick Moorhead said in an email to GamesBeat that Nvidia had a good quarter.

“In gaming, Nvidia is taking advantage of more people staying home and gaming with a very competitive 3000 Series product line,” Moorhead said. “I will be closely watching in the next quarter for competitive impacts and improvements due to major game titles dropping, like the new Call of Duty: Black Ops Cold War.”

Moorhead added, “Datacenter saw big increases from the Mellanox addition, but more of the growth was organic from machine learning. Finally, I’m not surprised in the auto declines as the industry is still in a bit of flux from Covid-19 impacts. I am expecting a sequential improvement in automotive.”