Original title: Nvidia’s second-quarter performance hits a new high. CEO cashed in $160 million in two months. ARM acquisition is suspected to be blocked
Southern Financial Reporter Jiang Yue reported that the high-performance computing chip manufacturer NVIDIA released the latest quarterly results as of August 1 after the US stock market closed on the 18th. During the period, the company recorded its highest quarterly revenue of US$6.51 billion since its establishment, an increase of 68% year-on-year. However, the plan to acquire the British chip design company ARM at a price of US$40 billion seems to be blocked, and it will take longer than expected.
Since the official “one split of four” shares on July 19, NVIDIA has risen from $181.61 per share after the split to $190.4 on August 18, a cumulative increase of 4.84% in one month. Since 2021, Nvidia’s stock price has risen by 45.93%, which has attracted great attention from the market. However, when the stock price continues to climb to new peaks, regulatory information revealed that Nvidia’s founder and CEO Huang Renxun has been selling stocks and shares in the past two months. Cash out about 160 million US dollars.
Sales and profit margins continue to rise
The latest quarterly report shows that the graphics card (GPU), CMP and related software products produced by NVIDIA continue to sell well in multiple markets such as games, data centers, professional vision platforms, and virtual currency mining. In the May-July quarter of this year, Nvidia recorded revenue of US$6.51 billion, an increase of 68% year-on-year, which was the most revenue-generating quarter in history; net profit according to GAAP rules reached US$2.374 billion, a year-on-year increase of 282. %.
The above performance has formed a certain support for the current high valuation of the stock. After the performance was released, Nvidia rose 1.9% in the after-hours market. According to the closing price on the 18th, Nvidia’s dynamic price-earnings ratio has reached 68 times. In contrast, Intel, which also produces high-performance computing chips, has a dynamic P/E ratio of only about 12 times.
Huang Renxun, founder and CEO of NVIDIA, said: “NVIDIA’s pioneering work in accelerating computing continues to promote the development of graphics, scientific computing and AI.” The quarterly report shows that game-related chips generated US$3.06 billion during the period. The data center business generated revenue of US$2.366 billion, a year-on-year growth of 35%. The growth rate of these two main businesses is still at the upper limit level expected by the market, thus supporting the stock price.
In this quarter from May to July, Nvidia launched many new products. GPU includes GeForce RTX 3080 Ti and GeForce RTX 3070 Ti, data center includes software platforms NVIDIA Base Command and Fleet Command, and professional vision has launched the world‘s first real-time 3D collaboration and simulation platform Omniverse. Huang Renxun said that the target customer areas include natural language understanding, recommendation systems, autonomous vehicles, logistics centers, digital biology, climate science, meta-universe, etc.
Due to its continuous involvement in the most cutting-edge technology fields, Nvidia’s profit margin has also remained at a very high level. According to GAAP rules, the gross profit margin last quarter was as high as 64.8%. Looking ahead to the August-October quarter, Nvidia expects revenue of 6.8 billion U.S. dollars and expects that its gross profit margin in accordance with GAAP can further increase to 65.2%.
The acquisition of ARM is suspected of being blocked
At present, competition in the global chip market is becoming fierce. The market is not only concerned about Nvidia’s operating performance, but also very much about the company’s US$40 billion acquisition of British chip company ARM, because the latter is a “shortcut” for corporate growth. However, after the quarterly report, the company’s CFO Colette Kress revealed that the acquisition of ARM “takes longer than expected.”
At the same time, Nasdaq’s disclosure documents reflect that Huang Renxun reduced his holdings of Nvidia shares in batches on July 1 and August 2, with a total cash of approximately US$160 million. Some market voices believe that Huang Renxun is taking advantage of the high position to “fall in peace”, because if the acquisition of ARM is rejected by the supervision of individual countries, it will put pressure on Nvidia’s stock price to fall.
Nvidia announced on September 14 last year that it plans to acquire ARM, a British chip design company, at a cost of US$40 billion. This is by far the highest bid in the chip industry, but it has been criticized as having a “monopoly” possibility. On June 15 this year, Qualcomm, the leader in communications chips, hinted that it could unite industry companies to invest in ARM and make it go public.
However, when ARM CEO Simon Segars responded to market rumors on July 2, he still “stands in line” with Nvidia, saying that it is better to be acquired by Nvidia than to issue an IPO. He said: “If we go public, the pressure to achieve short-term revenue growth and profitability will stifle our ability to invest, expand and innovate.”
ARM’s chip architecture is widely used in computing chips for mobile devices, and it is currently considering entering new fields such as data centers and automobiles. Segars said that the complexity of technology is getting higher and higher, ARM can not complete all the work alone, so Nvidia is needed.
(Author: China Southern Finance and Economics Media Reporter Jiang Yue, editor: Chen Qingmei)
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