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Nvidia Posts Q3 Beat Driven By Data Center Revenue, CEO Says Generative AI ‘Taking Off’: Why Is The Stock Down?

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Nvidia Corp. (NASDAQ:NVDA) delivered yet again by reporting forecast-beating third-quarter results Tuesday.

The top- and bottom-line results exceeded Street expectations, as data center revenue rose to a record, thanks to a broader industry transition from general purpose to accelerated computing and generative artificial intelligence.

The company issued upbeat revenue guidance for the fourth quarter but the stock slipped in after-hours trading, likely due to Nvidia’s commentary on the impact of the U.S. government’s China import restrictions.

Nvidia’s Key Q3 Numbers: Santa Clara, California-based Nvidia reported third-quarter earnings of $4.02 per share, compared to the $3.36-per-share consensus estimate. The bottom line improved from the year-ago quarter’s 58 cents per share and preceding quarter’s $2.70 per share.

Revenue increased 206% year-over-year and 34% sequentially to $18.12 billion, exceeding the Street forecast of $16.12 billion.

When Nvidia reported its June quarter results in late August, it guided third-quarter revenue to $16 billion, plus or minus 2%.

The non-GAAP gross margin came in at 75% vis-a-vis the guidance of 72.5%, plus or minus 50 basis points. This marked an improvement from the second quarter’s 71.2% and the year-ago quarter’s 56.1%.

“Our strong growth reflects the broad industry platform transition from general-purpose to accelerated computing and generative AI. Large language model startups, consumer internet companies and global cloud service providers were the first movers, and the next waves are starting to build,” said CEO Jensen Huang.

“NVIDIA GPUs, CPUs, networking, AI foundry services and NVIDIA AI Enterprise software are all growth engines in full throttle. The era of generative AI is taking off.”

See Also: How To Buy Nvidia (NVDA) Stock

Nvidia’s Q3 Performance By Segment: The data center business flourished again in the third quarter thanks to strong demand coming on the back of the development of large language models and generative artificial intelligence. The segment’s revenue rose to a record $14.51 billion, up 279%.

The gaming segment, which has been on an upward revenue trajectory after bottoming at $1.57 billion in the third quarter of 2023, continued to march higher. It recorded revenue of $2.86 billion.

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