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Nvidia reports record data center revenue, but warns of coronavirus impact

Daniel Howley
Technology Editor

Graphics chip giant Nvidia (NVDA) reported its Q4 2020 earnings after the bell on Thursday beating Wall Street’s expectations on the top and bottom line. The report comes amid a strong rebound in the data center industry, as well as the ongoing impact of the coronavirus sweeping across the tech landscape.

Nvidia announced it cut its Q1 revenue guidance by $100 million due to the virus.

Here are the most important numbers from the report compared to what analysts were expecting as compiled by Bloomberg.

  • Revenue: $3.11 billion versus $2.96 billion expected

  • Earnings per share: $1.89 versus $1.66 expected

  • Data center revenue: $958 million

  • Gaming revenue: $1.49 billion

Nvidia's stock was up 6% following the announcement.

Capital expenditures on servers and cloud-related components have seen an uptick in recent quarters, as evidenced by Intel's strong Q4 earnings report last month. Nvidia said it saw record revenue from its Data Center business, reaching $958 million in the quarter.

“Adoption of NVIDIA accelerated computing drove excellent results, with record data center revenue,” Nvidia CEO Jensen Huang said in a release following the announcement. “Our initiatives are achieving great success.”

Data center revenue was up 42.56% in the quarter.

President and Chief Executive Officer of NVIDIA, Huang Jen-hsun speaks during the Computex Show in Taipei on May 30, 2017. (Image: Sam Yeh/AFP via Getty Images)

UBS analyst Timothy Arcuri similarly sees Nvidia's data center business as a continued bright spot for the company. In January, Arcuri raised his price target for the chip maker to $300 from $240 on the strength of its data center platforms.

"Our estimate changes are driven by a more favorable view on Hyperscale environment in Q4 and improved visibility on demand as they get ready for NVDA 7nm data center product," Arcuri wrote in a note last month.

Close-up of glowing logo for an NVIDIA Geforce GTX graphics card inside a computer in a darkened room engaging in cryptocurrency mining, including for Bitcoin, San Ramon, California, October 23, 2019. (Photo by Smith Collection/Gado/Getty Images)

Nvidia is also in the midst of a $6.9 billion acquisition of networking company Mellanox Technologies. In Q3 2020, Nvidia said that it was making progress with European Union and Chinese authorities, and predicted the deal would wrap up in early 2020.

Nvidia also recently launched its GeForce Now game streaming service, bringing the long-awaited service out of beta, and offering it for $4.99 a month. But shortly after it was announced, Activision Blizzard (ATVI) pulled its games and Battle.net service from the platform, setting up what could be a major issue for Nvidia moving forward.

As shown by the company’s adjusted revenue guidance, Nvidia sees the ongoing coronavirus outbreak as a potential headwind for its data center, automotive, and gaming businesses in the coming quarters.

Nintendo (NTDOY), which uses Nvidia's Tegra processor in its Switch console, has already announced that products for its Japanese domestic market will be hurt by the production slowdown in the region as a result of the virus.

A previous version of this article misstated Nvidia’s Q4 earnings per share.

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