Nvidia (NVDA) shares fell on Friday after the company reported better-than-expected earnings for the third quarter. Despite beating analyst estimates, investors were disappointed by the company’s guidance for the fourth quarter, which fell short of expectations.
Nvidia reported earnings per share of $1.45 on revenue of $6.51 billion, surpassing analyst estimates of $1.34 per share on revenue of $6.33 billion. The company’s gaming segment, which accounts for a significant portion of its revenue, saw strong growth thanks to increased demand for gaming hardware during the pandemic.
However, Nvidia’s outlook for the fourth quarter fell short of expectations, with the company forecasting revenue of $6.8 billion, below analyst estimates of $6.9 billion. The company cited supply chain constraints and a slowdown in data center spending as reasons for the weaker-than-expected guidance.
Investors reacted negatively to the news, sending Nvidia shares down by as much as 5% in after-hours trading. The stock had already been under pressure in recent weeks amid concerns about the impact of rising inflation on the company’s profit margins.
Despite the sell-off, many analysts remain bullish on Nvidia’s long-term prospects. The company is a leader in the growing artificial intelligence and data center markets, and its graphics processing units (GPUs) are in high demand for a wide range of applications, from gaming to cryptocurrency mining.
Nvidia also recently announced plans to acquire Arm Holdings, a major player in the semiconductor industry, in a deal worth $40 billion. The acquisition is expected to further strengthen Nvidia’s position in the market and drive future growth.
Overall, while Nvidia’s stock may be facing short-term headwinds, the company’s strong earnings and continued innovation make it a compelling long-term investment opportunity for investors looking to capitalize on the growth of the technology sector.