NVIDIA Corporation (NASDAQ:NVDA)$NVDA Explodes On Earnings Beat and Data Center Business Growth

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Aug 25, 2020 (The Market Signal via Comtex) —
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A blow out second-quarter result is the catalysts driving NVIDIA Corporation (NASDAQ: NVDA)stock and the reason it is flirting with all-time highs. At a time when most companies are struggling to stay afloat, the chipmaker is doing exceedingly well, topping analysts’ estimates on earnings and revenue growth. Likewise, the stock is looking increasingly bullish, given a string of solid underlying fundamentals that continue to strengthen investor sentiments.

NVIDIA Outlook

The stock is already up by more than 100% for the year, outperforming the overall market. The rally has come on a huge turnover of traded shares as investors continue to bet on the company’s long term prospects and growth metrics.

A confirmation that Nvidia earnings surpassed expectations of $1.98 a share on coming in at $2.18 a share affirms growth in the core business. Revenue, on the other hand, grew 50% year over year to $3.87 billion topping expectations of $3.65 billion.

Nvidia continues to elicit bid tone in the market, on management, reiterating the phase of stellar financial results is likely to continue in the third quarter. Management expects revenues to come in at about $4.4 billion ahead of consensus estimates of $3.97 billion.

Data Center Business Growth

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Earnings and revenue growth are not the only development that continues to strengthen Nvidia sentiments in the market. A confirmation that data center revenue is growing at an impressive rate of surpassing gaming revenues is another development that affirms growth in emerging segments.

The data center segment, which includes processors for powering artificial Intelligence, cloud computing, and data centers, reported a 167% increase in revenues that came in at $1.75 billion. Gaming revenues, on the other hand, came in at $1.65 billion.

A meteoric rise in data center revenues attests to how Nvidia has become a household name in powering cloud computing and artificial Intelligence. Given the rate at which the segment is growing Nvidia has the potential to dominate the data center business as Apple did smartphones according to Jefferies analysts Mark Lipacis

Bottom Line

NVIDIA is in a phase of robust growth going by its second-quarter financial results. Its ability to shrug off the shocks triggered by COVID-19 underscores how resilient it is to generating long-term value.

A change of guard might be taking place in the semiconductor business with NVIDIA emerging as the new leader. Technological advancements backed by a nimble balance sheet that generates lots of cash to enhance innovation and shrug off competition affirm why the stock is powering high.

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