Computer graphics chipmaker Nvidia Corp. posted strong third-quarter results that topped Wall Street’s expectations today, driven by record sales of chips for data centers, especially those designed for artificial intelligence workloads.

The company also offered bullish guidance for the current quarter, sending its stock higher in extended trading.

Nvidia reported a profit before certain costs such as stock compensation of $1.17 per share on revenue of $7.1 billion, up 50% from a year ago. That was ahead of expectations, with analysts looking for a profit of $1.11 per share on sales of $6.82 billion.

Nvidia Chief Executive Jensen Huang (pictured) said the company’s performance in the quarter was “outstanding,” driven by strong demand for Nvidia’s AI products.

The company has enjoyed rapid growth over the last 18 months as one of the primary beneficiaries of the coronavirus pandemic. In fact, the company has struggled to meet the demand for its products, especially its hard-to-find GeForce graphics cards that are so popular with gaming fans.

Gaming is Nvidia’s largest business segment overall and it did $3.2 billion in sales during the quarter, up an impressive 42% from where it was one year ago. In a conference call, Huang said that was primarily thanks to rising sales of those GeForce graphics cards, which are selling out as fast as the company can make them.

Nvidia’s other major business involves selling graphics processing units to data centers, where they’re used to run cloud computing and AI workloads. Nvidia’s Data Center business saw sales rise by 55%, to $2.9 billion in the quarter.

Nvidia Chief Financial Officer Colette Kress said GPU sales were being driven by “hyperscale customers,” which is an industry term for public cloud providers such as Amazon Web Services Inc., Microsoft Corp. and other big data center operators. According to Kress, those customers are increasingly turning to Nvidia for chips that can power AI workloads such as understanding human speech and crunching data to power customer recommendations.

The other parts of Nvidia’s business are much smaller, but the Professional Visualization segment deserves highlighting nonetheless, with sales there up 144% year-over-year, to $577 million. The segment sells high-end GPUs for powerful laptop workstations used in professional design and other industries.

Nvidia has high hopes for that segment, which will play a key role in its ambition to supply the technology necessary to create the so-called “metaverse” espoused by Facebook Inc.’s founder Mark Zuckerberg and others. The metaverse refers to a virtual world where proponents believe people will adopt avatars and spend increasing amounts of time working and socializing. Nvidia’s recently updated Omniverse Enterprise platform makes it possible to create extremely realistic virtual characters, interpret speech and even design new 3D worlds.

As for Nvidia’s automotive business, it remains very small, with sales there totaling $135 million, up 8% from a year ago.

Industry analysts were united in their praise for Nvidia’s strong performance:

NVIDIA $NVDA crushes again. Highlights:
-Rev +50%; GM +260bps; Opinc +91%; NI +84%
-Every line saw growth
-Gaming +42%, DC 55%, Proviz +144%, Auto +8%, OEM +21%
-Up 3% AH pic.twitter.com/Ft8BPEULcT

— Patrick Moorhead #LenovoIAC (@PatrickMoorhead) November 17, 2021

Holger Mueller of Constellation Research Inc. told SiliconANGLE it was remarkable to see the company growing so fast in each of its business segments and that he was especially impressed with the data center unit’s performance.

“Nvidia is well on the way toward breaking the $30 billion annual revenue barrier, if not this year then on a rolling quarter basis by the first quarter of next year,” he said. “It is a remarkable growth story and it may even grow more if it gets to power the metaverse as it envisions.”

Nvidia remains in the process of trying to buy the British semiconductor design company Arm Ltd. for $40 billion but has come up against a few roadblocks recently. Last month, for example, the European Commission announced it will be investigating the proposed acquisition. Just this week, the U.K. government said it has instructed its Competition and Markets Authority to carry out its own in-depth investigation citing competition and national security concerns that may arise from the deal.

The company revealed in its earnings statement that the U.S. Federal Trade Commission has also expressed concerns over the deal. Nvidia said it will hold talks to try to address those concerns.

“Although regulators and some Arm licensees have expressed concerns or objected to the transaction, we continue to believe in the merits and benefits of the acquisition to Arm, its licensees and the industry,” the company said in its third-quarter earnings report.

It remains to be seen if Nvidia will eventually get the go-ahead to buy Arm, but the company believes it will continue to grow regardless. For the next quarter, it offered a bullish forecast of $7.4 billion in sales, well ahead of Wall Street’s $6.9 billion target.

Photo: Nvidia/Flickr