Nvidia Forecasts Q3 Revenue Above Expectation, Talks on Closing $40b Arm Deal Taking Longer Than Expected

Nvidia, the world’s biggest maker of graphics chips by market value, forecast third-quarter revenue above expectations, just after it said that discussions with regulators to approve its $40 billion proposed acquisition of Arm Ltd were taking longer than expected. Nvidia forecast $6.8 billion in revenue in the current quarter, surpassing expectations of $6.5 billion.

Notably, the company’s earnings for its second fiscal quarter ended August 1, beat estimates due to a boom in demand and strong graphic card sales.

Arm Ltd. is a British semiconductor and software design company based in Cambridge, England. While Arm also designs other chips, its primary business is in the design of ARM processors (CPUs), and it has long been a neutral supplier of technology throughout the chip industry. As could be expected, Nvidia’s plans to acquire Arm Ltd have spurred opposition from some of Nvidia’s rivals, such as Qualcomm, which worry that they may lose access to important Arm technology, should Arm become Nividia’s.

Investors have also expressed concerns over whether Nvidia’s move to acquire Arm will withstand regulatory scrutiny and close by March of next year as Nvidia promised. Nvidia’s Chief Financial Officer Colette Kress said in a statement that the acquisition of Arm will come through. “Although some Arm licensees have expressed concerns or objected to the transaction, and discussions with regulators are taking longer than initially thought, we are confident in the deal and that regulators should recognize the benefits of the acquisition to Arm, its licensees, and the industry,” Colette Kress said.

Nvidia’s business has experienced massive growth in recent months; its revenue surged 68 percent annually during the quarter, as the company benefits from the increase in demand for the kind of processors that it specializes in. Graphic chips made by Nvidia are increasingly significant for a variety of technologies including gaming, artificial intelligence, and types of cryptocurrency mining.

Sales of Nvidia’s gaming gear have especially soared during the pandemic. Sales of gaming gear increased to 85 percent to $3.06 billion, which was due to both GeForce graphics card sales, and sales of chips to game console makers.

Nvidia’s data center business also increased rapidly, growing 35 percent annually to $2.37 billion, which the company attributed to graphics cards for data centers, both in industrial uses and among cloud providers. Graphics cards, grew 87 percent to $3.91 billion, growing faster than the compute and network segment, which grew 46 percent to $2.6 billion.

However, Nvidia’s sales of cryptocurrency chip products, CMP, fell below expectations. The sum of $266 million was reported for cryptocurrency chip product sales, compared to the $400 million the company predicted in May.

Shares of Nvidia were up more than 2% in after-hours trading.