Nvidia forecast tops expectations on cloud sales despite coronavirus hit

(Reuters) – Nvidia Corp (NVDA.O) on Thursday forecast first-quarter revenue that topped Wall Street expectations, powered by sales of its chips to cloud computing vendors, even as it projected a $100 million hit from the coronavirus outbreak.

FILE PHOTO – The nVIDIA booth is shown at the E3 2017 Electronic Entertainment Expo in Los Angeles, California, U.S. June 13, 2017. REUTERS/ Mike Blake

The forecast reinforced expectations of a rebound in chip demand and sent Nvidia shares up nearly 7% in extended trading. Last month, Intel Corp (INTC.O) and Advanced Micro Devices Inc (AMD.O), Nvidia’s primary rivals in selling chips to data center customers, both forecast positive trends in that market.

Nvidia is the second chipmaker after Qualcomm Inc (QCOM.O) to warn about a potential impact on its businesses due to the coronavirus outbreak.

Nvidia’s largest market is chips that enhance the graphics in video games played on PCs and laptops. But in recent years, the company has expanded to sell to data center and cloud computing customers as its chips increasingly power artificial intelligence tasks such as facial recognition and speech recognition.

Revenue from Nvidia’s closely watched data center chips business rose 42.6% to $968 million in its fiscal fourth quarter, beating analysts’ estimate of $829 million, according to research firm FactSet.

Nvidia did not name big customers but said that “hyperscale” customers drove the increased data center sales, a group that industry analysts often define as major cloud computing vendors such as Alphabet Inc’s (GOOGL.O) Google, Amazon.com’s (AMZN.O) cloud unit and Microsoft Corp (MSFT.O).

Artificial intelligence chips for data

Keep reading this article on Reuters Business.

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