(Reuters) - Shares of Nvidia Corp (NVDA.O) hit a record on Friday, after it posted stellar quarterly results powered by higher demand for graphics chips used in gaming and data centers, and the rapid adoption of its new Volta chips for AI and driverless cars.
Shares of the chipmaker rose about 6 percent in morning trade on Friday - hitting a record of $217.18.
Nvidia’s gaming revenue in the latest quarter blew past Wall Street estimates but it was the data center business, the driver of future growth, that made analysts stand up and take notice as revenue in the unit more than doubled.
Revenue from the data center business, Nvidia’s second-biggest revenue contributor, rose to $501 million, beating analysts’ estimate of $474.2 million, according to Thomson Reuters I/B/E/S.
“Datacenter results have been stronger than forecast and we underestimated the value the market would assign to this franchise,” Nomura Instinet analyst Romit Shah wrote in a client note.
Shah raised his rating on the stock to “neutral” from “reduce.”
The company, which gets the bulk of revenue from gaming where it supplies chips for gaming consoles, has seen explosive growth at its data centers operations.
Nvidia launched the Volta chips in May as part of its Tesla V100 data center graphic processing unit (GPU) that will power systems from artificial intelligence (AI) to driverless cars.
“Volta’s launch we suspect was a major catalyst for Intel to go back to the drawing board with its AI chip Nervana, the tactical need to use AMD GPU, and the hire of Raja Koduri to head Intel’s new Graphics effort,” said Rosenblatt Securities analyst Hans Mosesmann.
Early this week, chipmaker Intel Corp (INTC.O) partnered with bitter rival Advanced Micro Devices Inc (AMD.O) for a graphics chip that will help the chipmakers take on Nvidia.
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