Shares of Nvidia (NVDA) 5.08%† fell in after-hours trading Thursday as investors reacted to the chipmaker’s lower-than-expected expectations. At 6:40 p.m. ET, Nvidia’s stock price fell more than 6% after rising 5% earlier in the day.
Nvidia’s revenue grew 46% year over year to $8.29 billion in its fiscal 2023 third quarter, which ended May 1. This impressive growth was fueled by an 83% increase in data center sales to $3.75 billion and a 31% increase in gaming revenue to $3.62 billion.
“We have achieved record results in Data Center and Gaming against a backdrop of a challenging macro environment,” Founder and CEO Jensen Huang said in a press release. “The effectiveness of deep learning to automate intelligence is driving companies across industries to use Nvidia for AI computing.”
Despite supply chain disruptions that have plagued the tech sector, Nvidia has been able to control its costs effectively. The adjusted gross margin even increased by 90 basis points (1 basis point is equal to 0.01%) to 67.1%. This, coupled with Nvidia’s strong revenue growth, helped grow adjusted operating income by 55% to $3.96 million. Adjusted EPS, in turn, rose 49% to $1.36.
Investors, however, appeared to be more focused on Nvidia’s financial forecast for the second quarter of 2023. Management expected revenue of approximately $8.1 billion, which was lower than Wall Street’s estimates of more than $8. 5 billion.
Nvidia noted that war in Europe and coronavirus-related lockdowns in China were likely to negatively impact sales results by about $500 million. Still, Huang highlighted the company’s promising slew of new offerings coming later this year, and remains optimistic that strong trends will continue to fuel Nvidia’s long-term expansion. He said:
We’re gearing up for the biggest wave of new products in our history with new GPU, CPU, DPU and robotic processors ramping up in the second half. Our new chips and systems will significantly advance AI, graphics, Omniverse, self-driving cars and robotics, as well as the many industries impacting these technologies.
For example, patient, long-term investors can use the sell-off as an opportunity to buy the technology leader’s stock at a discount.