This Stock Pops on Earnings Beat and Better-Than-Expected Guidance

This Stock Pops on Earnings Beat and Better-Than-Expected Guidance

Posted On August 20, 2021 1:25 pm

This tech stock reported strong fiscal second-quarter 2022 results after the market close on Wednesday, Aug. 18. As with last quarter, the graphics processing unit (GPU) specialist’s growth was driven by record revenue in its gaming and data center businesses, which are its two largest platforms.

Shares of Nvidia (NASDAQ:NVDA) rose 2.4% in Wednesday’s after-hours trading session. The market’s positive reaction can be largely attributed to both revenue and earnings beating Wall Street’s consensus estimates, and fiscal third-quarter guidance for both the top and bottom lines also coming in higher than analysts had been expecting.

The stock probably would have notched a bigger gain had investors received positive news on the pending Arm acquisition, which has run into some regulatory headwinds.

In 2021, Nvidia stock has returned 45.9% through Wednesday’s regular trading session. The S&P 500 has returned 18.2% over this period.

Wall Street was looking for adjusted EPS of $1.02 on revenue of $6.33 billion. So Nvidia surpassed both expectations, as well as its own guidance.

GAAP gross margin was 64.8%, up from 58.8% in the year-ago quarter and 64.1% last quarter. Adjusted gross margin landed at 66.7%, up from the year-ago period’s 66% and last-quarter’s 66.2%.

For additional context, in fiscal Q1, Nvidia’s year-over-year revenue, GAAP EPS, and adjusted EPS growth were 84%, 106%, and 103%, respectively.

In her CFO commentary, Colette Kress said the gaming-platform’s growth was driven by continued strong sales of the GeForce RTX 30 Series, based on the company’s Ampere GPU architecture. She attributed the data center’s year-over-year increase to the ramp up of Ampere “products into vertical industries and hyperscale customers.”

Professional visualization’s growth was driven by the ramp up of Ampere GPUs, “with growth led by desktop workstation GPUs.” The auto platform’s year-over-year revenue growth was “due to the recovery in automotive demand, which was impacted by the pandemic in the prior year,” Kress said.

The OEM and IP category’s robust 180% year-over-year revenue growth was driven by sales of the company’s cryptocurrency mining processor, or CMP, which generated revenue of $266 million.

Launching the CMP was one of the company’s two recent steps to address the issue of cryptocurrency miners buying Nvidia’s GeForce gaming GPUs to use for mining. This issue…

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