Chip giant$NVIDIA Corp (NVDA.US) $Earnings and revenue beat market expectations in the last quarter, but revenue guidance for the quarter was lower than expected and shares tumbled in after-hours trading.

NVIDIA Corp announced that operating income and earnings per share (EPS) reached record highs in the first quarter of fiscal year 2023 (hereinafter referred to as "the first quarter") in the fiscal year ending May 1, 2022, after US stocks traded on Wednesday, May 25, Eastern time.

Revenue in the first quarter was $8.288 billion, up 46% from a year earlier, with market expectations of $8.12 billion and a 53% year-on-year increase in the fourth quarter.

Non-GAAP adjusted EPS was $1.36 in the first quarter, up 49% from a year earlier. The market expects $1.30 and 69% year-on-year growth in the fourth quarter.

The non-GAAP gross margin in the first quarter was 67.1 per cent, up 90 basis points from a year earlier, slightly higher than the previous median of 67 per cent and 67 per cent in the fourth quarter.

In terms of performance guidance, NVIDIA Corp expects second-quarter revenue of about $8.1 billion, fluctuating between plus and minus 2 per cent, or $7.938 billion to $8.262 billion, compared with analysts' expectations of $8.44 billion.NVIDIA Corp said revenue would be reduced by about $500m in the second quarter due to the conflict between Russia and Ukraine and the epidemic in China. Colette Kress, chief financial officer of NVIDIA Corp, pointed out that of the $500m, $400m had an impact on the gaming business and $100m on the data center.

At the same time as the results were announced, NVIDIA Corp said that the board of directors decided to expand the scale of share buybacks by returning 2.1 billion US dollars to shareholders through share buybacks and dividends in the first quarter.Buybacks will be increased by as much as $15 billion.

Although NVIDIA Corp's first-quarter results are better than expected and will expand the scale of buybacks, investors are still more focused on the bad news of poor guidance in the second quarter from the perspective of share price performance. NVIDIA Corp's shares, which closed up more than 5 per cent on Wednesday, plunged in after-hours trading after the results were announced, falling more than 10 per cent at one point.The broader US stock market was dragged down, with Nasdaq, which closed up more than 1%, also fell after 100 trading. Other chip stocks fell after hours, AMD fell more than 2% after hours, and the semiconductor industry ETF SOXX fell more than 1% after hours.

Revenue from games and data centers hit new highs and data centers are expected to continue to set records

In terms of business, the revenue of NVIDIA Corp's two core businesses, games and data centers, also refreshed the record highs set in the previous quarter, of which data center growth was stronger than the previous quarter. Revenue from Professional Visualization was lower than expected and the growth rate was much lower than last quarter.

Revenue from the game business in the first quarter was $3.62 billion, up 31 per cent from a year earlier and 6 per cent from a month earlier. The market expects $3.46 billion, 37 per cent year-on-year and 6 per cent in the fourth quarter.

Data center revenue in the first quarter was $3.75 billion, up 83% year-on-year and 15% month-on-month. The market expects $3.6 billion, 71% year-on-year and 11% in the fourth quarter.

Revenue from professional visualization in the first quarter was $622 million, up 67% from a year earlier, down 3% from a month earlier, and the market is expected to be $647.9 million, up 109% from a year earlier and 11% from a month earlier.

The revenue of the automobile business in the first quarter was 138 million US dollars, down 10 per cent from the same period last year, up 10 per cent from the previous quarter, down 14 per cent from the same period last year and 7 per cent from the previous quarter.

NVIDIA Corp CEO Huang Renxun said that although the revenue of the game business has reached a new high, the data center is already NVIDIA Corp's largest platform. On the earnings call, he said that the data center is expected to hit a new high and is enthusiastic about the second half of the year. AI investment is a reliable strategy for enterprises. Most companies are working on specific areas of intelligence.

In terms of the data center business, Chief Financial Officer Kress said NVIDIA Corp expects strong growth in the data center in the future. In the first quarter, sales from large-scale and cloud computing customers more than doubled compared with the same period last year. Demand in the vertical sector remains strong and revenue growth in the network is accelerating.

Supply problems are expected to improve this year. Sales in the game industry may fall by more than 10% in the second quarter.

Huang Renxun said NVIDIA Corp's online business is still subject to great restrictions due to a shortage of parts. However, the supply problem will gradually improve this year. The supply of network products such as graphics processing units (GPU) is still limited, but it is expected to improve later this year, Kress said.

During the performance call, Huang Renxun asked about the demand of the game industry and the prospect after the second quarter. Huang Renxun said that the potential momentum of the game industry is still strong, and many new PC players have emerged in recent years. It is difficult to predict when the COVID-19 epidemic and the conflict between Russia and Ukraine will end, but the game industry is still in good shape.

Asked how sales in the game industry will decline in the second quarter, Kress said that NVIDIA Corp expects sales revenue in the game industry to drop by more than 10 percent in the second quarter compared with the first quarter. The company believes that terminal demand in the game industry is still strong, and that terminal demand in the second quarter is still expected to grow positively.