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Nvidia's Data Center Segment Is Generating Meaningful Upside

Jun. 11, 2020 9:40 AM ETNVIDIA Corporation (NVDA)57 Comments
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  • Nvidia Corp reported a great first-quarter fiscal 2021 earnings report.
  • In this article, we highlight the ongoing strength of its growing 'Data Center' segment.
  • Nvidia's growth outlook remains bright.
  • Longer term, Nvidia's 'Automotive' segment reinforces its promising growth outlook.

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Image Source: Nvidia Corporation - First Quarter Fiscal 2021 Earnings IR Presentation

By Callum Turcan

We are following up on our last Seeking Alpha article (link here) covering Nvidia Corporation (NASDAQ:NVDA) to bring attention to its latest earnings report and its strong growth outlook. Nvidia has performed exceptionally well during these challenging times as the world awaits a potential cure or vaccine for the coronavirus ('COVID-19').

Quarterly Update

On May 21, Nvidia reported its first quarter fiscal 2021 earnings (period ended April 26, 2020) and its 'Data Center' segment really stood out. Revenue at this segment came in above $1.1 billion in the fiscal quarter, up 18% sequentially and 80% year-over-year. Demand for data centers has apparently held up quite well during the pandemic as more employees work from home and due to stay-at-home orders driving up usage of data-hungry video streaming and telecommunications services. Nvidia's other large segment in terms of sales, 'Gaming,' saw its revenues decline sequentially but were still up a nice 27% year-over-year.

Overall, Nvidia's GAAP revenues were up 39% year-over-year last fiscal quarter hitting $3.1 billion and that helped more than double its GAAP diluted EPS, which came in at $1.47. Nvidia's GAAP operating income almost tripled year-over-year, hitting $1.0 billion last fiscal quarter, as growth in its operating expenses were modest compared to the surge in its top-line.

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Image Shown: Nvidia's data center segment really outperformed last fiscal quarter. Image Source: Nvidia - First Quarter Fiscal 2021 Earnings IR Presentation

Please note that a day after the fiscal quarter ended, Nvidia completed its acquisition of Mellanox through an all-cash transaction valued at ~$7.0 billion. As of April 26, 2020, Nvidia had $16.4 billion in cash, cash equivalents, and marketable securities on hand versus no short-term debt and $7.0 billion in long-term debt. The company should be in a position to retain its net cash

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