Nvidia shares jump as a chipmaker hits forecast

Nvidia Corp., the world's largest chipmaker by market value, jumped in late trading after an expansion into data-center semiconductors helped boost its sales forecast.

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Revenue in the fiscal fourth quarter will be about $7.4 billion, the company said Wednesday. That compares with a $6.86 billion average analyst estimate, according to data compiled by Bloomberg. After the report was released, the shares went up as much as 5.7%.

Nvidia, whose roots are in graphics chips for gaming systems, has pushed into processors that run servers, the powerful machines used in cloud computing and corporate networks. Revenue from that segment jumped 55% in the third quarter to $2.94 billion, well ahead of the $2.69 billion estimated by analysts. The auto industry's sales were disappointing because of supply constraints.

Over the last eight quarters, Nvidia has averaged 57% revenue growth. That performance has helped push its market capitalization above $730 billion, making it more than three times larger than Intel Corp., a company that has triple Nvidia's annual revenue. Nvidia is now one of the top 10 companies by market value in the S&P 500 Index, putting it just ahead of Berkshire Hathaway Inc., JPMorgan Chase Co. and Visa Inc.

The shares of Nvidia had more than doubled this year before the post-market rally.

In the third quarter, Nvidia posted record sales of $7.1 billion, which is higher than the $6.81 billion average prediction from analysts. Earnings came in at $1.17 a share, excluding some items, compared to an estimate of $1.11.

Nvidia also sells processors that handle criptocurrencies mining, but that market has been volatile. The division that includes that business saw its revenue increase 21% from a year ago, with $105 million in revenue coming from the mining chips.

The company sees another big opportunity in order to power the so-called metaverse, a term for interconnected virtual worlds. Nvidia is more than a year into the process of trying to acquire Arm Ltd., a designer of chips used in smartphones and myriad other technologies. It is still trying to get regulatory clearance for the deal in multiple jurisdictions around the world.

The U.S. Federal Trade Commission has expressed concerns about the purchase, Nvidia said Wednesday. Bloomberg reported on the agency's investigation earlier this year.

The transaction will give Nvidia Chief Executive Officer Jensen Huang the most widely used underlying technology in the chip industry and spread the company's reach into many devices, including smartphones. Several of Arm's major customers and Nvidia's competitors have voiced their opposition to the purchase because of the potential conflicts it might create. SoftBank Group Corp. is currently holding Arm.

Nvidia said on its earnings call that the merger would improve competition and that the deal would be a great opportunity for the industry.

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