After U.S. stock market on Wednesday, February 16, Nvidia, the world's largest manufacturer of graphics processing and artificial intelligence chips, announced its fiscal 2022 fourth quarter financial results as of January 30.
Shares edged higher after falling 3.6 percent on Wednesday, achieving triple-yang and refreshing weekly highs, falling nearly 10 percent so far this year, outperforming the S&P 500 index by 6 percent and falling more than 23 percent from a record high last November. But over the past year, Nvidia's total returns of 58 percent are much higher than the S&P broader market's nearly 12 percent total returns.
According to the financial report, NVIDIA's fourth quarter revenue and earnings were higher than expected, revenue reached a new high, respectively, the seventh consecutive quarter of revenue exceeded expectations, and the 12th consecutive quarter of profit exceeded expectations, the three major business areas of games, data centers and professional visualization business areas of quarterly and fiscal revenue reached new highs, as the future growth engine of the data center business for four consecutive quarters of revenue of more than $2 billion.
The company's revenue guidance for the first quarter of the new fiscal year ended April was $8.1 billion±2%, also higher than analysts' expectations of $7.22 billion. After hours, the stock price fluctuated between ups and downs, once falling more than 3%, then rising more than 3%, but the overall turned down. Previously, some analysts said that the market had too much hope for NVIDIA's earnings report, and if it was only slightly higher or in line with expectations, it may actually make the stock price fall.
Fourth-quarter and full-year revenue were all new highs, quarterly revenue and EPS grew faster than expected, and $1.36 billion would be lost by abandoning ARM
NVIDIA's fiscal fourth quarter 2022 revenue rose 53% year-over-year to a record high of $7.64 billion, and analysts expected $7.42 billion, up 8% sequentially from the third quarter. Adjusted EPS was $1.32 per share, also above expectations of $1.22, up 69% year-over-year and 13% sequentially. The adjusted gross margin was 67 percent, in line with the company's official guidelines and slightly below analysts' expectations of 67.1 percent.
The analysis shows that the revenue growth rate is weaker than the 61.3% increase in the same period of the previous year, and the EPS growth rate is close to the growth rate of the same period last year by 66%, but it is accelerated from the previous quarter, and the market originally expected revenue and earnings growth to continue the deceleration trend that began in the second quarter of fiscal 2022.
Fiscal 2022 revenue rose 61% year-over-year to a record $26.91 billion, higher than expected at $26.68 billion and at least the fastest increase in seven years. EARNINGS per share under GAAP doubled year-over-year (+123%) at a record $3.85, and non-GAAP earnings per share rose 78% year-over-year to $4.44, also higher than expected at $4.34 and at least the fastest pace since fiscal 2017.
The company said that due to its decision on February 8 to abandon its acquisition of British chip designer ARM from SoftBank in the face of "major regulatory challenges", it will record operating expenses of $1.36 billion in the first quarter of fiscal 2023, reflecting the "break-up fee" of the unsuccessful acquisition, so it expects GAAP operating expenses to increase to $3.55 billion next quarter, non-GAAP operating expenses of $1.6 billion, and non-GAAP gross margins of 67%.
Jensen Huang, ceo of Nvidia, said in a statement that seeing "exceptionally strong demand for NVIDIA's computing platforms", the company is driving advances in the most influential areas of artificial intelligence, digital biology, climate science, gaming, creative design, self-driving cars and robotics:
"We are entering the new fiscal year with strong momentum across our product lines, with the new software business models of NVIDIA AI (Artificial Intelligence), NVIDIA Omniverse (Full Universe) and NVIDIA DRIVE (Autonomous Driving) having excellent momentum. The company's spring GTC conference is coming soon, which will announce many new products, applications and partners using NVIDIA computing. ”
Data centers accelerated growth for two consecutive quarters, gaming and professional visualization revenues hit new highs but grew cooler than the previous quarter, and the automotive business declined
By business, game graphics chips remain the main driver of record revenue, up 37% year-on-year and 6% quarter-on-quarter to a new high of $3.42 billion, flat at the expected $3.4 billion, but less than 42% in the previous quarter. The share of game revenue in total revenue fell to less than 45%, and it accounted for 50% in the fourth quarter of last year. Full-year gaming revenue rose 61% year-over-year to a new high of $12.46 billion.
Another important business, data center revenue, which once overtook gaming revenue in the second quarter of fiscal 2021, rose 71% year-over-year and 11% sequentially to a record $3.26 billion, unchanged expectations of $3.2 billion and higher than the previous quarter's 55% year-on-year growth, the second consecutive quarter of accelerated growth. Full-year revenue for the business rose 58% year-over-year to a new high of $10.61 billion, but was weaker than the 124.5% increase in fiscal 2021.
The company said year-over-year growth in gaming revenue reflected higher GeForce GPU sales, and both the gaming and data center businesses continued to benefit from strong demand for NVIDIA Ampere architecture products.
Quarterly revenue for the Professional Visualization division increased 109% year-over-year and 11% sequentially to a record $643 million, but the year-over-year growth rate was weaker than the previous quarter's 144%. Full-year revenue increased 100% year-over-year to a record $2.11 billion.
However, automotive revenue decreased 14% year-over-year and 7% sequentially to $125 million, and full-year revenue increased 6% year-over-year to $566 million.
The company said the quarter-over-quarter and quarter-on-quarter decline in automotive revenue was due to continued declines in traditional cockpit revenue and supply constraints from automakers, but full-year revenue growth was driven by increased demand for autonomous driving and AI cockpit solutions.
According to the earnings report, Nvidia has established a multi-year partnership with Jaguar Land Rover to jointly develop and deliver next-generation autonomous driving systems, as well as services and experiences that support artificial intelligence. Nio's ET5 sedan, Xiaopeng Motor G9 SUV and Xiaoma Zhixing's fleet of robot taxis are using NVIDIA DRIVE Orin.
Wall Street is bullish on the long-term chip demand for the metacosm, but the supply bottleneck is a short-term resistance, and the plan to abandon the acquisition of ARM attracts attention
Wall Street generally expects the gaming and data center business to perform steadily and will continue to grow in the coming quarters, the new upgrade cycle of GPU graphics cards is conducive to NVIDIA's game chip demand growth, data center growth will also accelerate this year, investment bank Piper Sandler even expects NVIDIA's data center business to reach double-digit percentage month-on-month gains, and the company's investment in artificial intelligence is also positive.
However, the supply bottleneck of chip shortage is one of the short-term headoffs facing the company, and the gaming and data center businesses will be affected, and Nvidia relies on contract manufacturers to produce chips, so it will not escape the macroeconomic impact. It was also noted that Nvidia's growth may continue to depend on supply challenges, but the good news is that the drag on growth is "not a shortage of any end demand."
Citi analyst Atif Malik said investors will focus on data center growth, supply constraints and the prospect of gaming demand, and that the growth trend in data centers should "hold steady" this year as AI and machine learning are still in their early stages.
Rosenblatt Securities analyst Hans Mosemann raised the target price by $100 to $400 through the company's "all-universe" vision, arguing that the heat of the whole universe/metacosm will bring long-term growth potential to NVIDIA and provide impetus for the near-term stock price.
Wall Street Insights has mentioned that Nvidia announced the latest progress of its "Omniverse" strategy at the GPU Technology Conference (also known as the GTC Conference) on November 9 last year, which helped the stock price rush to a new high.
Nvidia's "whole universe" vision is part of Meta's proposed "metacosm", a real-time simulation and open virtual collaboration platform for enterprises, known as the "engineer's metacosm". Its underlying technology is the graphics platform RTX, which the company created and can be accelerated using CUDA cores. The company also announced a "three-core" strategy to upgrade the product route to "GPU + CPU + DPU".
However, before the metaverse is fully realized, NVIDIA's dominance in the key market for graphics chips remains key to its growth. Investors will also watch how NVIDIA maintains long-term rapid growth in the face of the collapse of the acquisition of British chip designer ARM. Due to strong regulatory opposition from many countries, Nvidia announced last week that it was abandoning its acquisition of ARM, which was expected to set a record for the largest scale in the history of the chip industry and significantly enhance its competitive strength.