Nvidia Tops 3Q Estimates On Strong Chip Demand; Stock Slips

Nvidia Corporation reported stronger-than-expected 3Q results, thanks to the robust sales of its chips used in gaming consoles and data centers. However, shares of the graphic chipmaker fell 2% in the extended trading on Wednesday as the company expects its 4Q data center revenues to decline sequentially.

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Nvidia’ (NVDA) adjusted EPS of $2.91 topped Street estimates of $2.57 and jumped 63% year-over-year. Its 3Q revenues soared 57% to $4.73 billion year-on-year and surpassed analysts’ expectations of $4.41 billion. Sales from Gaming and Data Center businesses spiked 37% and 162%, respectively, on a year-over-year basis.

“NVIDIA is firing on all cylinders, achieving record revenues in Gaming, Data Center and overall,” said Jensen Huang, CEO of Nvidia. “The new NVIDIA GeForce RTX GPU provides our largest-ever generational leap and demand is overwhelming. NVIDIA RTX has made ray tracing the new standard in gaming.” (See NVDA stock analysis on TipRanks)

For 4Q, Nvidia projects revenues to be approximately $4.8 billion (+/- 2%). The company’s sales outlook for the quarter exceeded the Wall Street projection of $4.42 billion.

Ahead of its earnings, Truist Financial analyst William Stein on Nov. 17 reiterated his Buy rating and the price target of $623 (16% upside potential), citing Nvidia to post “strong” 3Q results and provide solid 4Q outlook.

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 26 Buys, 4 Holds and 1 Sell. The average price target stands at $585.74 and implies upside potential of about 9.1% to current levels. Shares have skyrocketed 128.3% year-to-date.