NVIDIA posted remarkable growth in the third quarter of fiscal year 2024, with revenue up 206% year-over-year to $18.12 billion and net profit soaring 588% to $10 billion. These stunning gains follow a weak quarter last year and reflect demand recovery and improved margins.
The data center division was the star, generating $14.5 billion in sales, a 279% annual increase. Professional visualization also grew substantially. Importantly, after several quarters of declines, the gaming division stabilized with 81% revenue growth to $2.8 billion – a positive sign that channel inventory glut is easing amid strong demand for NVIDIA’s newest GPUs.
Overall gross margin also expanded to 75%, allowing more revenue to flow through to profits. Total operating income skyrocketed 652% to $11.5 billion. Analysts had expected $16.2 billion revenue, so NVIDIA considerably exceeded forecasts.
Looking ahead, there are some headwinds. CFO Collette Kress cautioned that recently imposed sanctions blocking sales of some products to China, Saudi Arabia and the UAE could harm data center revenue, since these countries contributed 20-25% of data center sales. Performance next quarter could suffer as a result.
Nonetheless, for the current quarter, NVIDIA is guiding for $20 billion revenue. After-hours trading was mixed as investors weighed the blowout Q3 numbers but potential data center slowdown and ongoing uncertainty in the macroeconomy.
In summary, NVIDIA delivered growth for Q3 more commonly seen in startups than mature tech giants. Profitability also substantially improved. The gaming rebound was a relief. But sanctions-related weakness in data center and unpredictable market conditions temper the excitement somewhat. While financial performance appears almost too good to believe, cooler heads recognize persisting risks that prevent limitless exuberance. For now, NVIDIA remains on a tear, but the road ahead may have some bumps.