Nvidia sales surge as it struggles to keep gaming chips in stock

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nvidia chipmaker

Nvidia has forecast better-than-expected fiscal first-quarter revenue, with its flagship gaming chips expected to remain in tight supply for the next several months.

As people wait for the global COVID-19 pandemic and resulting lockdowns to end, orders have kept demand high for chips that speed up video games. But the California-based company's gaming chips have also regained popularity for mining cryptocurrency, a trend Nvidia is trying to counter by offering special mining chips in order to free up graphics chip supplies for gamers during a global chip shortage.

While Nvidia Corp was long known for its gaming graphic chips, its aggressive push into artificial intelligence chips that handle tasks such as speech and image recognition in data centers has helped it become the most valuable semiconductor maker by market capitalization.

It has eclipsed rivals Intel and Advanced Micro Devices.

Nvidia shares were up 3% at $597.50 in extended trading after the results.

On a conference call with investors, CFO Colette Kress said that a global chip crunch made it hard to keep the company's flagship gaming chips introduced last fall in stock and that the chips would likely remain in tight supply through the fiscal first quarter.

Kress said analysts have estimated that cryptocurrency mining contributed between $100 million and $300 million to Nvidia's sales in the fiscal fourth quarter. The company expects the new mining chips to generate about $50 million revenue in its fiscal first quarter, Kress added.

To discourage miners from using gaming chips, Nvidia will start shipping software with its gaming chips that slows down their ability to mine some currencies and then separately release a mining-specific chip. Nvidia CEO Jensen Huang told journalists at our partner news agency Reuters that the mining chips do not need gaming features such as display outputs, which means that chips that might not be suitable for gaming can be used for mining instead.

"The way the use the chips, they don't need a whole bunch of functionality," Huang said of miners.

The company expects first-quarter revenue of $5.30 billion, plus or minus 2%, above analysts' average estimate of $4.51 billion.

Revenue in the quarter ended on Jan. 31 rose to $5 billion from $3.11 billion a year earlier. Analysts on average were expecting $4.82 billion, according to IBES data from Refinitiv.

Revenue in the company's gaming segment was $2.5 billion, above analyst estimates of $2.36 billion, according to data from FactSet. Data center revenue was $1.9 billion, above estimates of $1.84 billion according to FactSet data.

The team at Platform Executive hope you have enjoyed this news article. Translation from English to other languages via Google Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Reporting by Jonathan Landay. Editing by Steve Orlofsky.

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