Nvidia Corp. (NVDA) Shares rose sharply on Tuesday after a report suggested the chipmaker had developed a new semiconductor it could sell to customers in China without violating new U.S. export restrictions.
The Reuters report, later confirmed by the company, said the A800 advanced graphics processing unit (GPU) could be used instead of A100 chips made by Nvidia, which are currently on the list of technologies banned from sale in China by the government of USA.
Nvidia said in the Securities and Exchange Commission report in September that new restrictions on the sale of its A100 chips and the upcoming H100, which are also included in other products designed by Nvidia for data centers, could lead to about 400 million dollars of sales — about 11 percent of expected data center revenue — at risk if its customers don’t buy alternative products.
Nvidia added that the H100 chip launch, expected later this year, would likely be delayed as it moves some of its operators out of China as a result of the US government order.
Shares of Nvidia were marked 2.44% higher in premarket trading to show an opening price of $146.50 each, paring the stock’s six-month decline to about 13.4%.
However, Nvidia’s recent quarterly earnings highlighted the group’s exposure to the weakness of the gaming sector and underscored its summer warning of slower growth in the final months of the year.
Nvidia posted adjusted earnings of 51 cents per share for the three months ending in July, the group’s fiscal second quarter, well short of the Street’s consensus estimate of $1.26 per share.
Data center revenue was flat at $3.81 billion, Nvidia said, a 61 percent increase from last year. Revenue from gaming chips – which are also used in cryptocurrency mining – fell 33% from last year to $2.04 billion, a figure also in line with the group’s early August update linked to the Covid lockdown in China and the impact of Russia’s war on Ukraine in Europe.
Looking at the current quarter, Nvidia said it sees revenue of about $5.9 billion, plus or minus 2%, compared to the Street consensus of $6.95 billion, with a gross margin of about 65%, plus or minus 2%. Weakness in gaming, Nvidia said, would be partially offset by more robust demand in the automotive and data center businesses.