Nvidia’s Q4 financials look to brighter skies with strong quarterly revenue growth

Major artificial intelligence and graphics chipmaker Nvidia reported its 2020Q4 financials today (the company’s fiscal quarter ends on January 26th, 2020). The company announced revenues of $3.11 billion for the quarter, a jump of 41% from the year ago quarter and a small bump from the third quarter.

Even more importantly, the company’s gross margin improved remarkably year-over-year, moving from 54.7% to 64.9%. The company reported a net income of $950 million for the quarter. After-hours traders jumped into the stock, with Yahoo Finance reporting a roughly 6.32% increase in the company’s share price immediately following the earnings.

That positive news though didn’t overcome the full-year fiscal numbers though, which painted a more complicated picture for the company. Revenue was down slightly for the 2020 fiscal year compared to 2019, and operating expenses, operating income, net income, and diluted earnings all headed the wrong way, in some cases by more than 30%.

Nvidia’s struggles in 2019 weren’t unique to the chipmaker, as last year was bruising for the chip industry overall. The industry’s total sales declined the fastest in more than a decade from a number of factors, including less demand in some parts of the market, oversupply in other parts of the market (driving down prices and thus sales revenue), as well as on-going trade tensions between the U.S., China, South Korea, and Japan.

Nvidia itself has had a huge number of ups and down in recent years. Riding the crest of the crypto wave, the company’s stock soared as crypto miners sought the company’s GPUs, which were well-positioned to handle the hashing functions at the core of many proof-of-work crypto protocols. Yet, the crypto winter crushed the stock, which saw a precipitous decline of 50% at the tail end of 2018.

The past year though has seen Nvidia turn something of a corner. It started the year with a share price of around $150, and today closed at nearly $271, a gain of more than 80%. Part of that story — as it is with the rest of the chip industry — is the sense that a whole new set of workflows (and therefore markets) are moving to silicon, including in automotive, high-performance computing (where Nvidia acquired Mellanox for $6.9 billion early last year), Internet of Things, and even in 5G.

That excitement on the big corporate side has also shown up in the venture world as well. Startups like Cerebras, Nuvia, Graphcore and more are targeting these new workflows, putting pressure on Nvidia, Intel, and other incumbents to outperform these upstarts.