Demand Improving For Chip Maker Nvidia — WSJ

By Asa Fitch 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 15, 2019).

Nvidia Corp. said chip sales in some of its key markets started to recover in recent months even as it posted a fourth-straight quarter of lower earnings and said that its revenue decline wasn’t over.

The Santa Clara, Calif.-based company Thursday said revenue linked to its cloud-computing activities improved sequentially in its fiscal third quarter. Gaming revenue, which made up more than half of overall sales, was also up strongly sequentially. But both segments were still lower than in the year-prior period.

Nvidia reported a 27% drop in net income to $899 million. Adjusted earnings per share, the chip maker’s more closely watched earnings measure, fell to $1.78 from $1.84 a year ago, well above the $1.58 analysts surveyed by FactSet expected.

The company last year enjoyed strong sales in its third quarter, driven both by customers in China, who placed orders ahead of looming tariffs on some U.S. goods, and by demand for chips used for cryptocurrency mining. Without those benefits, Nvidia’s sales fell to $3.01 billion in the quarter ended Oct. 27, down from $3.18 billion a year ago and above analysts’ projections.

The sales challenges aren’t over. The company’s revenue forecast in the current quarter of around $2.95 billion came in short of analysts expectations.

Nvidia has long led the market in graphics-processing chips for personal computers. Users in recent years found new applications for the powerful processors, including for cryptocurrency mining, which helped bolster demand. More recently, cloud-computing giants such as Amazon.com Inc., Alphabet Inc.’s Google unit and Microsoft Corp. have embraced the chips to offer artificial intelligence-related applications on their systems.

Intel Corp., the largest U.S….

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