Nvidia Q3 revenue EPS beat expectations, data center slightly underwhelms

The graphics chip titan's data center revenue, although it nearly tripled, was below the most exuberant expectations.

Shares of graphics chip titan Nvidia declined slightly in late trading after the company this afternoon reported fiscal Q3 revenue and profit that comfortably exceeded Wall Street's expectations, but missed slightly the most bullish expectations.

CEO Jensen Huang said NVIDIA is "firing on all cylinders. Demand, he said, for the company's latest video game compute cards, the GeForce RTX GPU, "is overwhelming." 

Revenue in the three months ended in October rose 57%, year over year, to $4.73 billion, yielding EPS of $2.91. 

Analysts had been modeling $4.42 billion in revenue and $2.58 per share in earnings. 

Nvidia's revenue from its data center business rose by 162%, year over year, to $1.9 billion, the company said. Revenue from video gaming was up 37% at $2.27 billion. 

In a note to clients this evening, Aaron Rakers with Wells Fargo, a bull on the stock, wrote, "We expect investors to focus on perceived modest Datacenter rev. beat (most notably ex-Mellanox)." He notes that excluding $615 million from the Mellanox business, the core datacenter revenue for Nvidia was $1.286 billion. That is below his own forecast for $1.292 billion.

For the current quarter, the company sees revenue of $4.896 billion to $4.704 billion. That is well ahead of consensus for $4.4 billion and $2.54.

Nvidia has been riding the success of its new generation of GPUs, the A100 series, introduced in May. Huang said that cloud companies are "deploying it globally," referring to the parts. "And our customers are moving some of the world's most popular AI services into production, powered by NVIDIA technology. "

On Monday, the company introduced a new version of the part, one with 80 gigabytes of memory, double the amount of the initial version. It also unveiled a workstation that serves as an AI appliance, as an alternative to racks of equipment.

The company is in the process of trying to acquire chip IP vendor ARM for $40 billion.

Nvidia shares declined slightly to $534.12 in late trading, after having initially popped higher.