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Applied Materials Expects Supply-Chain Issues, But Nvidia Delivers A Positive Revenue Outlook


Applied Materials Expects Supply-Chain Issues, But Nvidia Delivers A Positive Revenue Outlook
Strong demand for semiconductor chips from data centers prompted the chipmaker Nvidia Corp to forecast revenues for its current quarter above the estimates of analysts.  
However, after-hours trading saw Nvidia's stock drop 2.8 per cent due to stagnant gross margins compared to the prior quarter and concerns about the company's exposure to the cryptocurrency business.
According to IBES statistics from Refinitiv, Nvidia forecasts first-quarter revenue of around $8.1 billion, compared to analysts' estimates of $7.29 billion. In the fourth quarter, data center revenue increased by 71% to a new high of $3.26 billion.
On a conference call with analysts, the company's Chief Executive Jensen Huang also said that supply was a constraint, but that he anticipated that to get better.
Revenue for Nvidia, the world's top maker of graphic and artificial intelligence chips, and other chipmakers is increasing as IT firms are venturing into the "metaverse" and demand for data centers rises.
Nvidia posted a record fourth-quarter revenue of $7.64 billion, beating analyst expectations of $7.42 billion. Its fourth-quarter net income increased to almost $3 billion compared to $2.46 billion for the same period a year ago.
Despite this, the business claimed it only sold $24 million in crypto-specific cards in the fourth quarter of fiscal 2022, which ended Jan. 30. Gaming revenue in the fourth quarter hit a new high of $3.42 billion, up 37 per cent over the previous period.
"A meaningful part of its gaming sales do include crypto-mining which we think could be volatile. Our most recent industry check does indicate a significant weakness in crypto-mining demand," said KinNgai Chan, an analyst at Summit Insights Group.
Despite the data center business outgrowing other businesses, Chan expressed disappointment that Nvidia's gross margin did not improve in the fourth quarter compared to the third. The fourth-quarter gross margin was maintained at 67.0 per cent, unchanged from the prior quarter.
The news comes after SoftBank Group Corp's deal to sell chip creator Arm to Nvidia fell through owing to regulatory issues.
On the conference call, Huang assured analysts that Nvidia is continuing to use the Arm architecture in its products. It is a licensee of the technology, and Nvidia intends to produce Arm-based CPUs, which are the conventional brains of computers, to accompany its graphics processors.
"We're just thrilled that Arm is now growing into robotics and autonomous vehicles and cloud computing and supercomputing," said Huang. "In all these different applications, we intend to bring the full spectrum of Nvidia's accelerated computing platform to Nvidia Arm CPUs."
Meanwhile, Applied Materials Inc, a chip-making equipment supplier, reported record quarterly revenue on Wednesday, thanks to customers such as Samsung Electronics and Taiwan Semiconductor Manufacturing Company. find out more
Gary Dickerson, CEO of Applied Materials, said the supply environment is still difficult, but the company is doing everything it can to meet customer demands. According to Refinitiv data, the company predicted revenue of $6.35 billion in the second quarter, which was somewhat below analysts' expectations.
"Since we are already close to being sold out for the year, we also have a positive growth outlook for 2023," Dickerson told analysts on a conference call, adding demand is very strong and spending on wafer fabrication equipment could reach $100 billion in 2022.