Nvidia Q3 2021 Earnings Report: $2.91 EPS Beats Expectations with 162% Data Center Revenue Surge
Discover how Nvidia's Q3 2021 earnings shattered forecasts with record revenue growth, driven by an explosive 162% increase in data center sales and a promising acquisition of Arm Ltd.
Nvidia (NVDA) delivered an impressive Q3 FY 2021 earnings report on November 18, 2020, surpassing analysts' expectations across key financial metrics. The company posted adjusted earnings per share (EPS) of $2.91, well above the anticipated $2.57, while total revenue and data center revenue also exceeded forecasts.
Highlights:
- Adjusted EPS: $2.91 vs. $2.57 expected
- Revenue surpassed analyst projections
- Data center revenue surged beyond estimates
- Arm Ltd. acquisition targeted for completion in Q1 2022
Strong Earnings Momentum
Nvidia’s Q3 revenue growth accelerated, primarily fueled by a remarkable 162% year-over-year increase in data center revenue, setting new records for the third quarter. CEO Jensen Huang remarked, "NVIDIA is firing on all cylinders, achieving record revenues in Gaming, Data Center, and overall." The company anticipates completing its strategic acquisition of UK-based Arm Ltd. in early 2022, aiming to establish a cutting-edge AI lab and supercomputer in Cambridge, England.
Market Context and Investor Focus
Amid the ongoing COVID-19 pandemic, demand for gaming and remote work solutions has soared, propelling Nvidia’s growth in gaming and data center segments. Investors eagerly awaited the Q3 report to assess if Nvidia could sustain its robust financial momentum. The company’s stock has soared, outperforming the broader market with a 155.6% total return over the past year, eclipsing the S&P 500’s 15.9% gain.
Financial Performance Trends
After a period of declining earnings and revenue from Q4 FY 2019 through Q3 FY 2020, Nvidia rebounded with explosive growth in Q4 FY 2020, posting a 135.5% year-over-year EPS increase. This momentum continued with substantial revenue growth in subsequent quarters, peaking at 49.9% in Q2 FY 2021. Analysts forecast continued strong performance with a 43.9% EPS rise and 46.7% revenue growth for Q3 FY 2021, and full-year revenue growth of 44.7%—the fastest in over seven years.
Data Center Segment Driving Growth
Nvidia’s expertise in graphics processing units (GPUs) has translated effectively into the booming data center market, with GPUs powering AI and machine learning technologies. The data center revenue skyrocketed 167.5% year-over-year in Q2 FY 2021 and is expected to climb another 152% in Q3. The $7 billion acquisition of Mellanox Technologies and the pending $40 billion Arm Ltd. deal are strategic moves to strengthen Nvidia’s AI and data center capabilities, though regulatory approvals remain pending.
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