Nvidia stock rallies after big earnings beat

Nvidia Corp. shares rallied in the extended session Thursday after the graphics-chip maker reported earnings and revenue that topped Wall Street estimates by a healthy margin, even as revenue for the company’s second-largest segment fell short of expectations.

Nvidia NVDA, +0.38% shares surged 7% after hours, following a 0.4% rise to close the regular session at $160.19. Stock options before earnings had implied a tamer-than-usual stock reaction.

The company reported first-quarter net income of $394 million, or 64 cents a share, compared with $1.24 billion, or $1.98 a share, in the year-ago period. Adjusted earnings were 88 cents a share. Analysts surveyed by FactSet had forecast earnings of 58 cents a share.

Revenue fell to $2.22 billion from $3.21 billion in the year-ago quarter. Analysts had forecast revenue of $2.2 billion.

“Nvidia is back on an upward trajectory,” said Jensen Huang, Nvidia founder and chief executive, in a statement. “Despite the near-term pause in demand from hyperscale customers, the application of AI continues to accelerate.”

Revenue from data centers — Nvidia’s second-largest business segment — fell 10% to $634 million from the year-ago period, while analysts polled by FactSet had expect data-center sales to decrease about 5% to $663.7 million.

Gaming, Nvidia’s largest segment, saw revenue fall 39% to $1.06 billion, but that was better than the $933.5 million expected by Wall Street. Professional visualization sales rose 6% to $266 million, while the Street expected $289.9 million.

Auto sales rose 14% to $166 million, while analysts expected $163.8 million, and “OEM & IP,” or original equipment manufacturers and intellectual property, revenue fell 74% to $99 million, lower than the $121.4 million expected by the Street.

Nvidia expects second-quarter revenue of $2.5 billion to $2.6 billion, while analysts had forecast revenue of $2.54 billion.

The PHLX Semiconductor Index SOX, -1.68%  finished

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