(Reuters) - Nvidia Corp forecast second-quarter revenue above Wall Street estimates on Thursday, as it expects sales of its graphics chip to benefit from a recovery in the gaming market.
While Nvidia has been pushing into newer growth areas such as data centers, artificial intelligence and self-driving cars, the company’s key business still remains selling chips that enhance video game graphics.
“I think China has stabilized. There are some 300 million PC gamers in China and people are expecting it to grow,” Chief Executive Jensen Huang said on a post-earnings conference call.
Revenue from its gaming chip business, which accounts for nearly half of Nvidia’s overall sales, rose 11 percent to $1.05 billion in the fourth quarter, beating research firm Factset’s estimates of $933.5 million.
The company said it also expects continued growth in sales of its gaming laptops this year, but added that CPU shortages, while improving, will affect the initial ramp of the business.
The company forecast revenue of $2.55 billion, plus or minus 2%, for the current quarter, largely above analysts’ expectations of $2.53 billion, according to IBES data from Refinitiv.
Summit Insights analyst Kinngai Chan said the current quarter outlook was “better than feared”, with the mid-end gaming segment continuing to be the growth driver.
However, revenue from its data center business fell to $634 billion, missing analysts’ estimate of $663.7 million.
Nvidia’s net income fell to $394 million, or 64 cents per share, in the first quarter ended April 28 from $1.24 billion, or $1.98 per share, a year earlier.
Excluding items, Nvidia earned 88 cents per share, above 81 cents per share estimated by analysts.
Total revenue fell to $2.22 billion, but was still above analysts’ estimates of $2.20 billion.
Shares of the company were up 1.5% at $162.61 in extended trading.
Reporting by Sayanti Chakraborty in Bengaluru; Editing by Anil D'Silva