NVIDIA Shares Surge Following Big Earnings Beat, Full-Year Forecast

Jensen Huang
At the end of January, NVIDIA lowered its revenue guidance for its fiscal fourth quarter of 2019, at the time citing sluggish GeForce RTX demand. The company's share price subsequently took a beating. Now two weeks later, NVIDIA's share price is on an upswing following its fourth quarter earnings report, in which the company beat its lowered forecast.

It was still a "turbulent" quarter overall. NVIDIA reported revenue of $2.21 billion, down 24 percent from $2.91 billion a year earlier, and 31 percent from $3.18 billion in the previous quarter. However, that figure is slightly above NVIDIA's recently adjusted guidance of $2.2 billion.

"This was a turbulent close to what had been a great year," said Huang "The combination of post-crypto excess channel inventory and recent deteriorating end-market conditions drove a disappointing quarter."

"Despite this setback, NVIDIA’s fundamental position and the markets we serve are strong. The accelerated computing platform we pioneered is central to some of world’s most important and fastest growing industries—from artificial intelligence to autonomous vehicles to robotics. We fully expect to return to sustained growth," he added.

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Indeed, the crytpocurrency crash hit NVIDIA hard. The company saw a 29 percent sequential decline in overall GPU sales, which accounted for $1.98 billion, and a 20 percent drop compared to the same quarter a year ago. Not surprisingly, its gaming division saw the biggest decline—sales were down 46 percent sequentially and 45 percent annually.

NVIDIA had hoped that its GeForce RTX launch would bolster its GPU sales and help offset a drop in the cryptocurrency market. However, NVIDIA initially launched only high-end (and premium priced) SKUs. Combined with a lack of a widespread support for real-time ray tracing and Deep Learning Super Sampling (DLSS) in games, sales fell short of expectations, as NVIDIA noted in January.

"These products deliver a revolutionary leap in performance and innovation with real-time ray tracing and AI, but some customers may have delayed their purchase while waiting for lower price points and further demonstrations of RTX technology in actual games," NVIDIA stated last month.

Looking ahead, NVIDIA now hopes its GeForce RTX 2060 will drive more people to adopt its latest GPU architecture. It is the least expensive GeForce RTX card on the market, and was not factored into the company's fourth quarter sales.

NVIDIA also pointed to having unveiled a record 40+ new gaming laptops in over 100 configurations powered by GeForce RTX GPUs. Combined with strong data center sales, NVIDIA anticipates $2.20 billion in revenue, plus or minus 2 percent, during the first quarter of its 2020 fiscal year.

After surging in after market trading hours, NVIDIA's share price this morning is up over 5 percent.