Apocalypse Later

Image source: n_defender - shutterstock

What's going on?

Nvidia reported better-than-expected quarterly results earlier this week, but lets just hope the chipmakers AI ambitions dont start getting out of hand

What does this mean?

Nvidia outdid itself last quarter literally, given that its data center and gaming businesses both broke records. Its data center segment brought in around 70% more revenue than the same time in 2020, as more and more companies turned to its chips to power their artificial intelligence services from speech recognition to fraud detection. Meanwhile, revenue from Nvidias gaming business grew almost 40%, mostly driven by bumper sales of its latest video game chip. And while Nvidias auto segment saw a 14% drop-off in revenue, that was only to be expected: carmakers have been cutting back on production.

Either way, Nvidias overall revenue for the quarter rose by 53% to hit a new all-time high. So now its brimming with confidence: the chipmaker thinks demand isnt going anywhere fast, and its outlook for this quarter came in far better than expected too.

Why should I care?

For markets: Close, but no cigar.
Nvidias bragging rights were short-lived, with investors sending its stock down after the update. That could be because theyd already taken the chipmakers record results and high-growth forecast into account: Nvidias share price has, after all, outperformed an index that tracks the worlds biggest chipmakers by nearly 70% in the last year (tweet this). In other words, record-breaking earnings werent enough: Nvidia needed to smash expectations.

The bigger picture: Nvidias the odd one out.
There is one sign that chipmakers might not be feeling quite as confident as Nvidia. See, Applied Materials which makes the machinery chipmakers use to make their chips posted a weaker-than-expected revenue outlook for this quarter earlier in the week. And since Applied supplies chipmaking giants like TSMC and Intel, its muted prediction suggests they might be planning to limit their spending plans going forward.

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Do Not Disturb

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.