Nvidia Corp. (ticker: NVDA) investors were bracing for the worst ahead of the company’s first-quarter earnings report this week after shares of rival semiconductor Advanced Micro Devices ( AMD) plummeted 24 percent following its first-quarter report.
Fortunately for Nvidia shareholders, the company delivered yet another quarter of massive growth lead by strength in its data center graphics processing segment.
Nvidia shares jumped 17.8 percent on Wednesday after the company reported earnings per share of 79 cents on $1.94 billion in revenue. Both numbers topped consensus analyst expectations of 66 cents per share and $1.91 billion, respectively. The company also revealed that $1.95 billion is the midpoint of its second-quarter revenue guidance, topping analyst expectations once again.
Year-over-year revenue growth was impressive across the board for Nvidia. The company reported 49 percent growth in gaming revenue and 24 percent growth in automotive revenue. However, the company’s incredible 186 percent growth in data center revenue stole the show.
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“Our data center computing business nearly tripled from last year, as more of the world’s computer scientists engage deep learning,” CEO Jensen Huang said. “One industry after another is awakening to the power of GPU deep learning and artificial intelligence, the most important technology force of our time.”
Canaccord Genuity analyst Matthew Ramsay says Nvidia’s data center segment will be the key to its growth story in the next several years. Canaccord projects Nvidia’s annual data center sales could jump from $1.7 billion to more than $4 billion within the next three years.
“Our overall bullish thesis on GPU computing continues to accelerate, and we believe Nvidia’s emergence as a platform computing company (of which gaming is just one important piece) is now cemented,” Ramsay wrote this week.
Despite surging more than 605 percent in the past three years, Canaccord says Nvidia stock still has upside as long as the company continues to deliver such impressive growth numbers.
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Following the earnings report, Canaccord reiterated its “buy” rating for Nvidia and raised its price target for the stock from $125 to $155.
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Nvidia Corporation (NVDA) Earnings Beat Driven by Data Center Growth originally appeared on usnews.com
