Nvidia’s second-quarter sales and profit topped estimates, suggesting that a slump in orders may be easing amid a revival in demand for graphics chips and parts used in data centers.
Revenue in the quarter that ended July 28 was $2.58 billion and profit excluding certain costs was $1.24 a share, the Santa Clara, California-based company said in a statement on Thursday.
Sales in all business lines rose from the previous quarter, Nvidia said, a sign the company is addressing challenges that had stalled growth. Chief Executive Officer Jensen Huang has argued that a slowdown in orders for computer-gaming chips and processors for artificial intelligence tasks was temporary as customers worked through stockpiles of unused parts.
Huang said gaming laptops able to handle sophisticated games and artificial intelligence models able to handle real-time chat bots were driving demand. The new video game chips use so-called ray tracing technology, which creates pictures by calculating how light hits objects, and students returning to school are buying laptops with the high-end silicon.
“Essentially our business is normalized,” Chief Financial Officer Colette Kress said, forecasting improving profit margins due to sales of the high-end gaming chips.
Revenue has now shrunk from a year earlier for three straight quarters, and Nvidia forecast another decline of about 9% for the current period.
Gaming-chip sales came in at $1.3 billion, up 24% sequentially. Revenue from Nvidia’s second-biggest business, data center, climbed 3.3% from the prior period to $655 million.
On the call, Huang said demand for graphics chips used in servers was improving across the board, excluding a couple of so-called hyperscale data-center operators who don’t give Nvidia much insight into their plans.