Nvidia Corporation (NVDA) reported its Q1 2023 earnings results on Wednesday, May 24 afternoon. Nvidia is a major graphic chip or GPU player and is thus heavily impacted by demand health of related retail markets. NVDA’s new promising segments are cryptocurrency mining and gaming. In this respect, Nvidia launched its innovative GeForce RTX 4070 GPU based on the Ada architecture, which enables DLSS 3, real-time ray-tracing and the ability to run most modern games at over 100 frames per second at 1440p resolution. It also added 36 DLSS gaming titles, bringing the total number of games and apps to 300. And Nvidia expanded GeForce Now’s game titles to more than 1,600.

The company's shares soared following the upbeat results and due to pretty strong guidance for the current year. In after-hours trading, Nvidia’s stock price is up to $375.26 a share, up 23%.

Also, both Nvidia and AMD also were able to benefit from the weaker performance of their main competitor Intel (INTC), as Intel has been apparently losing market share in the data center space in recent quarters due to unresolved chip production bottlenecks and muted product line-up.

In numbers, Nvidia grossed revenues of $7.2 billion, which was around 10% more than expected. At the same time, revenues were still down by double-digits compared to one year earlier. In terms of EPS, the semiconductor giant was able to beat estimates easily as well, by around 20%. Earnings per share were down 20% YoY, however, indicating that the company was still struggling during the period.

Nvidia's different business units did not all perform equally well during the quarter. Thus, Nvidia's data center business pocketed revenues of $4.3 billion during Q1, up from 14% from a year ago, which represented a new record high. On the other hand, Professional visualization’s Q1 revenue was $295 million, down 53% from a year ago, but up 31% from the previous quarter.

Nvidia NVDA guided for Q2 revenue of $11 billion, plus or minus 2%; the chipmaker has never before reported quarterly revenue higher than $8.29 billion, which it hit in the fiscal first quarter a year ago. Analysts on average were expecting $7.17 billion, a gain from the $6.7 billion in sales. One of the reasons data-center products are higher margin has a lot to do with how much Nvidia’s software ecosystem is required for the hardware that run exponentially growing AI models.

The company forecast adjusted gross margins of 70% plus or minus 50 basis points for the second quarter, after reporting 66.8% for the first quarter, which was down from the year-ago quarter’s 67.1%, as stronger sales of higher-margin data-center products counter the sales drop in lower-margin gaming chips.