Nvidia (NASDAQ:NVDA) rose in morning trading after the chipmaker posted a surprise rise in second-quarter revenue and gave a better-than-expected revenue forecast for the current quarter.
Shares gained 8.2 percent to $22.15 at 9:54 a.m. in New York, expanding gains over the past year to 28 percent.
Net income slumped nearly 80 percent to $26 million in the quarter due to higher costs and a bigger tax bill, the Santa Clara, California-based company said in a statement late yesterday.
Nvidia forecast revenue to fall to $1.16-$1.20 billion in the current quarter from $1.23 billion a year earlier. Analysts had expected a fall to $1.10 billion.
Total revenue rose 4.5 percent to $1.15 billion in the second quarter. Analysts had expected $1.01 billion, according to Capital IQ.
Automotive revenue rose 76 percent in the quarter and accounted for only 6.2 percent of Total revenue.
"Our strong performance in a challenging environment reflects Nvidia's success in creating specialized visual computing platforms targeted at important growth markets," chief executive officer Jen-Hsun Huang said in the statement.
The company said 8 million cars on the road were using its chips and that it was working with more than 50 companies for its DRIVE chip for self-driving cars.
Nvidia gets a majority of its revenue from its graphic chips made for personal computers, and there were fears that the fall in PC sales would hurt Nvidia just like it has Intel Corp and Advanced Micro Devices Inc.
In May, Nvidia said it would wind down its Icera modem operations as it shifts its focus toward gaming, automotive and cloud computing applications, and expected related restructuring charges of about $100 million to $125 million. At the time, Nvidia said it was "open to a sale of the technology or operations," but said Thursday that "a viable buyer failed to emerge."