But can the company edge out stiff competition?
Nvidia released its Q2 earnings report for the 2020 fiscal year on Thursday. The company’s sales and profits managed to beat analysts’ expectations, leading to a 7% stock increase during after-hours trading.
These results indicate that, despite a recent slump in orders, demand for the company’s graphics chips and other products may be returning.
Nvidia still faces stiff competition from companies like Intel and AMD, both of which offer rival products in the tech and gaming sectors.
But the company’s recent earnings report did beat expectations, Nvidia’s revenue numbers are still down from the previous year. Still, prior to the earnings report, the company’s shares had increased by 11% since the beginning of 2019.
Nvidia Q2 2020 Earnings Highlights
Here are the key points from Nvidia’s Q2 2020 earnings report:
- Revenue: $2.58 billion
- EPS: $1.24
- Gaming Chip Sales: $1.31 billion
- Net income: $552 million
Gaming remains Nvidia’s biggest segment, bringing in $1.31 billion in revenue. The company also said sales in the current period will be about $2.9 billion, give or take 2%.
In the press release, Nvidia founder and CEO Jensen Huang stated, “We achieved sequential growth across our platforms.” He continued, “Real-time ray tracing is the most important graphics innovation in a decade. Adoption has reached a tipping point, with NVIDIA RTX leading the way.”
The company will pay a quarterly cash dividend of 16 cents per share on September 20, 2019, to all shareholders of record on August 29, 2019.
Nvidia noted that before repurchasing its stock, its first priority is to complete the purchase of Mellanox, a leader in high-performance computing.
Once completed, Nvidia believes this deal will boost its earnings per share, gross margin, and cash flow.
Returning to Normalcy
This latest earnings report gives plenty of reasons for investors to be optimistic, but some detractors still believe Nividia will continue to struggle in the face of stiff competition.
However, per CNBC, Matt Bryson of Wedbush Securities told clients that there are reasons to be optimistic about a return to normalcy in the second half of 2019.
Bryson wrote, “Our meeting with [PC maker] Maingear indicated NVDA continues to dominate the high end/custom PC GPU market and is holding share vs. AMD. ”
Nvidia is also focused on future technologies to encourage growth and bolster sales.
In the company’s earnings report, Huang states, “NVIDIA accelerated computing momentum continues to build as the industry races to enable the next frontier in artificial intelligence, conversational AI, as well as autonomous systems like self-driving vehicles and delivery robots.”
While Nvidia continues to face strong competition, there’s reason to believe the company will continue to outperform Wall Street expectations.
