Nvidia Data Center Revenue Surged in Q3 FY2022

Q3 FY2022 Results

Nvidia reported record quarterly Total Revenues of $7.1 billion after markets closed yedterday [1], while Gaming remained its largest contributor with 3.22 billion, up 42% year-over-year, reflecting higher sales of GeForce GPUs.

The increasingly important Data Center business surged 55% compared to the same period a year ago and 24% compared to the previous quarter, generating $2.94 billion in Revenue during the reported quarter.

Nvidia's CFO commented that Data Center revenue was "…driven by sales of Ampere architecture products to hyperscale customers for cloud computing…" [2], with the "hyperscale" term typically referring to companies like Amazon, Google etc.

Gross Margins (GAAP) strengthened to 65.2%, up 40 basis points (bps) on a quarterly basis and 260 bps on a yearly basis.

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Crypto Disappointment

At the start of 2021 the company had launched a new type of chip, designed for mining Cryptocurrencies, called Cryptocurrency Mining Processor (CMP) [3]. The new product was created in order to address the specific needs of Ethereum mining. At the time of the announcement (February 18 2021), ETH/USD was trading close to 2,000, at what was then, record highs.

During the first quarter of FY2022, CMP had generated Revenue of $155 million [4], while in the following quarter it had accelerated to $266 million [5].

During this latest reported quarter however, CMP Revenue growth slowed significantly, bringing in just $105 million.

Q4 FY2022 Guidance

The chip maker offered upbeat projection for the next quarter, seeing Revenues of $7.4 billion (+/- 2%), while GAAP Gross Margins are also expected to be slightly higher, to 65.3% (+/- 50 bps).

Tapping into Metaverse

Facebook founder and CEO Mark Zuckerberg has managed to create some buzz with his vision for the Metaverse.

Nvidia is also tapping into this virtual reality world, with the Omniverse platform and its founder and CEO Jensen Huang recently commented that this is closer that people think. He also said that "…the economy of the virtual world will be much, much bigger than the economy of the physical world…" [6].

ARM Deal Scrutiny

Over a year ago, Nvidia had announced an approximately $40 billion proposed acquisition of Arm Limited [7], a British semiconductor manufacturer whose chip designs are used in most mobile devices.

This potentially industry changing deal, has not been completed yet and has faced scrutiny from regulators around the world. The latest related news came from the UK, as the country's Competition and Markets Authority opened a Phase 2 probe into the deal this week [8].

Stock Split

Back in May, the company had announced a Four-for-One Stock Split, in the aftermath of the stock's meteoric rise in since 2020. The stock started trading on the adjusted basis on July 20, after the shareholders had given approval in June [9].

Stock Movement

NVDA.us has had an amazing year, with gains in excess of 120% year to date. This resulted in new all-time highs earlier in November (323.26). but the current week has been negative so far.

We will be now looking forward to see how the stock will open following yesterday's news, but the solid results are likely to lead to a higher open and NVDA.us looks poised for fresh record highs.

From a purely technical prospective, weakness below its EMA towards mid-274.00s can be seen, but at this point, the next move will be based on the reaction to the earnings.


Past Performance: Past Performance is not an indicator of future results.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 18 Nov 2021 https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-third-quarter-fiscal-2022

2

Retrieved 18 Nov 2021 https://s22.q4cdn.com/364334381/files/doc_financials/2022/q3/Q3FY22-CFO-Commentary.pdf

3

Retrieved 18 Nov 2021 https://blogs.nvidia.com/blog/2021/02/18/geforce-cmp/

4

Retrieved 18 Nov 2021 https://s22.q4cdn.com/364334381/files/doc_financials/quarterly_reports/2022/Q122/Q1FY22-CFO-Commentary.pdf

5

Retrieved 18 Nov 2021 https://s22.q4cdn.com/364334381/files/doc_financials/2022/q2/Q2FY22-CFO-Commentary.pdf

6

Retrieved 18 Nov 2021 https://twitter.com/YahooFinance/status/1458489137959522307

7

Retrieved 18 Nov 2021 https://nvidianews.nvidia.com/news/nvidia-to-acquire-arm-for-40-billion-creating-worlds-premier-computing-company-for-the-age-of-ai

8

Retrieved 18 Nov 2021 https://www.gov.uk/cma-cases/nvidia-slash-arm-merger-inquiry#phase-2

9

Retrieved 30 Nov 2021 https://nvidianews.nvidia.com/news/nvidia-announces-four-for-one-stock-split-pending-stockholder-approval-at-annual-meeting-set-for-june-3

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