SAN FRANCISCO Shares of Nvidia Corp (NVDA.O) fell 2 percent in extended trade, erasing an initial gain on its strong profit report, after the chipmaker pointed out supply constraints amid strong demand for its products.
Nvidia said its quarterly profit nearly doubled -- breezing past Wall Street expectations -- as the company gained market share for the graphics semiconductors it sells to personal computers makers.
"Our ongoing strategy to extend the reach of the (graphics microprocessor) is paying off," said Nvidia Chief Executive Jen-Hsun Huang said in a statement.
The Santa Clara, California-based company cited a broadening use of graphics processor intense computer programs, such as video and photo editing software, video games and three-dimensional maps, used by consumers.
Sales of Nvidia's desktop graphics processors rose 37 percent from a year ago, while sales of notebook graphics processors surged 129 percent.
"We're just communicating that the industry is tight," Huang said on a conference call, indicating that capacity at the contract chipmakers it uses is close to full and amid strong demand for memory chips and other semiconductors.
Chief Financial Officer Marvin Burkett said that in the current quarter there may be "some product limitations, as manufacturing is somewhat limited and our inventories are low."
"We're going to work hard to eliminate any supply constraints in Q3," Burkett said.
Nvidia said net income for its second fiscal quarter ended July 29 increased to $172.7 million, or 43 cents per share, from $86.8 million, or 22 cents per share, a year ago. Revenue rose 36 percent to $935.3 million from $687.5 million.
Analysts expected, on average, a profit of 34 cents a share, according to Reuters Estimates, on revenue of $859.8 million.
Burkett said he expects third-quarter revenue to rise 5 percent to 7 percent from the preceding period, implying $982.0 million to $1.0 billion. Analysts' average estimate is $937.1 million.
Nvidia also announced a 3-for-2 stock split.
Nvidia shares fell 2 percent to $45.20 in extended trading, after rising 54 cents to close at $46.13.
The stock has climbed 23 percent so far this year, based on Wednesday's closing price, compared with a 14 percent increase so far in the Nasdaq Composite Index.
(Reporting by Duncan Martell)