February 17, 2016 / 9:30 PM / 2 years ago

Nvidia revenue beat powered by strong demand for graphic cards

(Reuters) - Chipmaker Nvidia Corp reported stronger-than-expected quarterly revenue, driven by strong demand for its graphics chips used in gaming consoles and personal computers.

The company’s shares rose 7.9 percent in after-hours trading.

Nvidia has emerged as a dominant player in the high-end PC gaming market, where gamers are willing to pay hundreds of dollars for graphics cards used in playing graphically demanding games.

Revenue from its core business that designs graphics cards for PCs such as GeForce rose 25.4 percent to $810 million.

“GeForce sales are driven by the launch of great gaming titles and that again proved true this past holiday season,” Chief Financial Officer Colette Kress said on a conference call.

Nvidia’s business benefited from the release of major games in the holiday quarter such as “Star Wars: Battle Front”, “Need for Speed” and “Call of Duty: Black Ops III”.

“They clearly are benefiting not only from new game titles but also market share gains from AMD,” Needham & Co analyst Rajvindra Gill said.

Rival Advanced Micro Devices last month forecast first-quarter revenue below analysts’ estimates, due to lower demand for its graphic chips used in consoles and an economic slowdown in China.

Nvidia, whose chips are used in enhancing graphics in dashboard displays of vehicles, has also been developing processors and software that power self-driving cars.

Revenue from auto business, which includes its Tegra processors and Drive operating system, jumped 66 percent to $93 million.

Nvidia in January unveiled Drive PX 2 supercomputer for self-driving cars and said Volvo Car Group will be the device’s first customer.

The company also forecast first-quarter revenue of $1.23 billion-$1.29 billion. Analysts on average were expecting revenue of $1.23 billion, according to Thomson Reuters I/B/E/S.

Net income rose to $207 million for the fourth quarter ended Jan. 31 from $193 million a year earlier.

On a per-share basis, net income was flat at 35 cents per share.

Excluding items, the company earned 52 cents per share, beating average analyst estimate of 32 cents per share.

Revenue rose 12 percent to $1.40 billion, above average analyst estimate of $1.31 billion.

Up to Wednesday’s close, the company’s stock had risen about 24 percent in the past 12 months.

Reporting by Kshitiz Goliya in Bengaluru; Editing by Anil D'Silva

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