Earnings of semiconductor giant Nvidia Corp. (NVDA) surged and topped estimates in the third quarter of 2019 when all the operating segments registered double-digit revenue growth. Meanwhile, total reported revenues and the outlook for the fourth quarter fell short of expectations, driving the company’s stock down 16% in the after-hours trading Thursday.
Adjusted earnings of the Santa Clara, California-based company climbed to $1.84 per share in the October quarter from $1.33 per share a year earlier, beating estimates. Reported profit was $1.23 billion or $1.97 per share, compared to $0.84 billion or $1.33 per share in the third quarter of 2018.
Revenues moved up 21% annually to $3.18 billion helped by a 58% growth in the Datacenter business, which reflected the robust demand for the company’s artificial intelligence solutions. The other segments – Professional Visualization, Gaming and Auto – also registered double-digit growth.
“Our market position and growth opportunities are stronger than ever. During the quarter, we launched new platforms to extend our architecture into new growth markets – RAPIDS for machine learning, RTX Server for film rendering, and the T4 Cloud GPU for hyperscale and cloud,” said CEO Jensen Huang.
Looking ahead, the management expects fourth-quarter revenues to rise 2% year-over-year to $2.7 billion, which is below the consensus Wall Street forecast. Unadjusted and adjusted gross margins are expected to be approximately 62.3% and 62.5%, respectively. The company is looking for operating expenses of $915 million for the January quarter.
During the third quarter, Nvidia returned $1.13 billion to shareholders, comprising share repurchases worth $855 million and $273 million of dividends. The company also raised its quarterly dividend by 7% to $0.16 per share and announced plans to return an additional $3 billion to shareholders through fiscal 2020.
Nvidia shares hit a record high in September this year after witnessing several ups and downs. The stock closed Thursday’s regular trading session up 2.6% but lost sharply after the earnings report.