Salem Radio Network News Wednesday, December 8, 2021

Business

Nvidia forecasts upbeat revenue on metaverse hopes

By Nivedita Balu and Stephen Nellis

(Reuters) – Nvidia Corp forecast fourth-quarter revenue above analysts’ expectations on Wednesday, betting on growth in its data center business as more internet companies set out to invest in artificial intelligence and metaverse.

The online realm that uses augmented and virtual reality to help users interact has captured more attention after Facebook, now renamed Meta, said it would boost capital expenditure and shift focus from its social media business.

The move will be a big boost for Nvidia, the world’s biggest maker of graphics and AI chips, as metaverse applications would need more computing power and drive demand for chips.

The company last month released Omniverse Enterprise, which will start at $9,000 per year, to build powerful computing systems with its chips for corporate customers.

“We showed what is possible when we can jump into virtual worlds. … This is the tip of the iceberg of what’s to come,” Nvidia’s chief executive, Jensen Huang, said in a statement on Wednesday.

Nvidia expects current-quarter revenue of $7.40 billion, plus or minus 2%, above analysts’ average estimate of $6.86 billion, according to IBES data from Refinitiv.

The company’s shares were up nearly 4% in extended trading, after more than doubling this year.

The company has so far avoided major supply chain problems despite a global chip crunch, but supply chain costs are rising. It said Wednesday that outstanding inventory purchase and long-term supply obligations were $6.90 billion, up from $2.57 billion a year earlier and up from $4.79 billion in the prior quarter.

A day after British regulators said 6 they were launching an in-depth probe of Nvidia’s proposed acquisition of chip technology supplier Arm Ltd, Nvidia disclosed the deal was also under scrutiny in the United States.

“Regulators at the US Federal Trade Commission (FTC) have expressed concerns regarding the transaction, and we are engaged in discussions with the FTC regarding remedies to address those concerns,” Nvidia said in a statement.

For the reported third quarter, revenue in Nvidia’s gaming unit rose 42% to $3.22 billion and data centers surged 55% to $2.94 billion.

Analysts had expected $3.13 billion and $2.75 billion for gaming and data centers, respectively, according to FactSet.

Overall, revenue rose about 50% to $7.10 billion for the three months ended Oct. 31, above the average estimate of $6.83 billion, according to IBES data from Refinitiv.

(Reporting by Nivedita Balu in Bengaluru and Stephen Nellis in San Francisco; Editing by Sriraj Kalluvila and Leslie Adler)

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