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Behind NVIDIA’s Record Fiscal 3Q18

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Revenues increased 32%

Chip designer NVIDIA (NVDA) reported record revenues and earnings for its fiscal 3Q18 (October quarter). In the process, it smashed consensus estimates on these key items.

NVIDIA’s revenues of $2.6 billion represented a quarterly top-line record. The revenue figure rose 32% YoY (year-over-year) and topped the consensus estimate by about $280.0 million. Its adjusted EPS (earnings per share) of $1.33 also posted a quarterly record and surpassed consensus estimates by ~$0.26.

Strong data center business underpinned record results

Behind NVIDIA’s record fiscal 3Q18 results was a strong performance in the company’s data center business, where revenues more than doubled from fiscal 3Q17. NVIDIA reported data center revenues of $501.0 million, up 109.0% YoY and above the consensus estimate of $474.2 million.

NVIDIA’s data center products include the Volta chips, which were introduced in May to power systems ranging from artificial intelligence (or AI) to self-driving vehicles.

With Volta chips, NVIDIA is benefiting from accelerating adoption of AI technologies around the world in different enterprises. Leading cloud vendors Amazon (AMZN) and Microsoft (MSFT) are among NVIDIA’s clients for AI systems.

Amazon and Microsoft reported that their core cloud revenues increased 42.0% and 90.0% YoY, respectively, in the September quarter.

NVIDIA recruits AI clients

NVIDIA’s AI client base continues to expand, with the company recently announcing that Alibaba (BABA), Baidu (BIDU), and Tencent (TCEHY) would adopt its Volta chips to accelerate AI implementations across enterprise and consumer applications.

NVIDIA’s core gaming business also contributed to the record revenues and earnings in 3Q18, as gaming revenues increased 25.0% YoY to $1.6 billion.

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