Nvidia Corp., the biggest maker of graphics chips used for personal-computer games, predicted sales that may exceed analysts’ estimates on demand for high-priced machinery that can run the most challenging titles. The stock rose the most in more than four years.
Revenue in the period that ends in October will be $1.18 billion, plus or minus 2 percent, the company said Thursday in a statement. That compares with an average analyst estimate of $1.1 billion, according to data compiled by Bloomberg.
Nvidia may be making up for some of the revenue it’s losing in the shrinking PC market with increasing orders for chips used in high-end desktops. Chief Executive Officer Jen-Hsun Huang is also trying to find new uses for graphics-chip technology by developing products that will run games from remote data centers and move electronics in cars from driver assistance to increasingly controlling vehicles.
“The gamers will always upgrade,” said Kevin Cassidy, an analyst for Stifel Nicolaus & Co. “There are some guys who will buy Nvidia no matter what.”
Shares of the Santa Clara, California-based chipmaker rose 12 percent to $22.98 at Friday’s close in New York, their biggest one-day gain since January 2011. The stock is up 15 percent this year.
Net income in the fiscal second quarter, which ended in July, was $26 million, or 5 cents a share, compared with $128 million, or 22 cents a share, in the same period a year earlier. Profit, excluding certain costs, was 34 cents a share, compared with the average analyst estimate of 21 cents.
Revenue rose 4.5 percent to $1.15 billion compared with the average analyst estimate of $1.01 billion.
While the broader market for computers is suffering as consumers shift to smartphones to get online, gamers who spend thousands of dollars on powerful, speedy machines are investing in Nvidia-based hardware to stay up to date, Huang said in an interview.
“Gaming’s doing great, that’s it,” he said. “There are several hundred million gamers and they upgrade their computers pretty regularly because games are getting better all the time, the production value is so beautiful now and they want to enjoy that at its fullest.”
Sales in the graphics-chip business grew 9 percent in the second quarter from a year earlier, the company said. Within that category, sales of GeForce gaming graphics products rose 51 percent, the company said.
Total worldwide personal-computer shipments fell 9.5 percent in the three months that ended in June, market researcher Gartner Inc. reported on July 9. Manufacturers shipped 68.4 million units, compared with 75.6 million a year earlier, the steepest quarterly decline since the third quarter of 2013. U.S. unit sales fell to 15.1 million, down 5.8 percent, with desktop PCs hit particularly hard, Gartner said.