It was a quarter for the ages, certainly for NVIDIA (NASDAQ: NVDA) shareholders. The fiscal 2017 third-quarter numbers themselves were spectacular, but founder and CEO Jen-Hsun Huang summed it up best: “We had a breakout quarter — record revenue, record margins and record earnings were driven by strength across all product lines.”
Investors clearly agreed with Huang after NVIDIA blew away both per-share earnings and revenue expectations. By midday trading on Friday, shares were up 28% to nearly $87. Analysts had estimated earnings per share of $0.57 on revenue of $1.69 billion. NVIDIA reported sales of $2 billion and EPS — after removing one-time items — of a whopping $0.94, up 77% year over year.
Though the quarter was spectacular, it was how NVIDIA was able to generate such astounding numbers that bodes well for the future. Sales rose by an astounding 54% year over year, but operating expenses rose just 11%. That explains how the company was able to increase its gross margins from last year’s 56.5% to 59% in Q3.
NVIDIA also credited its strong results to widespread adoption of its new Pascal graphic processing unit (GPU) in the burgeoning virtual reality (VR), artificial intelligence, autonomous cars, and gaming industries.
And for the icing on NVIDIA’s Q3 cake, its board of directors approved a $2 billion increase to its share buyback initiative, and bumped the quarterly dividend up to $0.14 from $0.115. The new dividend will be paid on Dec. 19 to shareholders of record on Nov. 18.
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Tim Brugger has no position in any stocks mentioned.
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