Shares of Artificial Intelligence company Nvidia were down over ten percent in extended trading after the company issued its earnings results on Wednesday, even though the company beat the expectations of analysts. The company issued weak guidance for the ongoing quarter which caused the decline.
Nvidia will also be slowing its pace with regard to hiring talents as it comes up with strategies to manage its expenses in the face of growing macroeconomic concerns, CFO Colette Kress said.
For the fiscal first quarter, the company announced earnings per share of $1.36, adjusted, beating the expectation of $1.29 that analysts had forecasted. Revenue for the quarter came in at $8.29 billion surpassing the estimate of $8.11 billion that analysts forecasted.
The company said it expects revenue for the ongoing quarter to come in at around $8.1 billion. This is below the expectation of $8.54 billion that analysts expect.
The company’s stock has declined more than 43 percent in 2022. This comes in the face of macroeconomic challenges such as inflation and supply chain shortages, and investors who are shifting their investments to safer stocks and away from fast-growing ones. In a statement, Nvidia’s CEO Jensen Huang mentioned that the company was plagued with a challenging macro environment. Operating expenses were up 35 percent YoY to $1.6 billion on a non-GAAP basis.
Although the company, like others, have has some setbacks as a result of factors like the pandemic, supply chain challenges, and a declining macro-environment, Nvidia has managed to continue to increase its revenues. The company‘s graphic processors section is witnessing increasing demand. These processors are used widely in advanced gaming and AI in the cloud.
Total sales for the quarter were up 46 percent YoY. Its core businesses – center and gaming sales, saw noteworthy growth in the quarter. Its data center business which sells chips to cloud computing companies and enterprises, grew 83 percent YoY to $3.75 billion. This growth surpassed that of its core gaming business. Its core gaming business which sells graphics cards for playing advanced 3D games grew 31 percent to $3.62 billion.
The company said the growth in gaming was driven by graphic cards for laptops and game console chips. Nvidia is the maker of the Nintendo Switch chip.
Professional visualization for workstations grew 67% YoY to $622 million, but the company’s automotive business was down 10% on a YoY basis to $138 million.