Nvidia Q3 - Computing, Video-gaming, & Big Data centres Accelerating

Nvidia is the market leader in artificial intelligence chips, and it reported third-quarter numbers on Thursday that blew past the street's expectations.

Thanks to the Covid-19 pandemic, the demand for home computing, video-gaming, and big data centres is accelerating. Nvidia is one of the biggest winners from the changes in how people live their lives.

The graphic-chip maker reported total revenues of $4.73 billion, up 57% year-on-year of which the data centre division contributed $1.9 billion, up a smashing 162%. Gaming revenues jumped 37% to a record $2 billion. The catalyst was a well-timed release of the company's latest processors and a pandemic that forced people to stay home.

Nvidia's gaming business should continue growing into the fourth quarter, which will be boosted by the holiday demand of the Nintendo Switch console, which uses its processors. Nintendo Switch recently broke the record for longest best-selling streak (22 consecutive months), beating the Xbox 360s 21 months record. Nintendo Switch sold over 7 million units in the third quarter and has lifetime sales of 68.3 million units compared to Xbox One's 50 million.

Management expects data centre processors to continue to grow in the coming quarter and that a sequential decline will come more from the recently acquired Mellanox business.

Nvidia is still awaiting the green light from regulators on the $40 billion acquisition of UK based chip designer ARM Holdings which would open up a new business line in circuit designs for smartphones. There's still a lot of growth potential from the RTX 3090 chip and new business lines for this business and we still strongly believe in buying and holding it for the long-term.