Nvidia's Profit Falls Short

All told, Nvidia reported revenue of $1.15 billion in the three months ended April 27, in line with analyst expectations. At this time last year, Nvidia had sales of $844 million.

The Santa Clara, Calif., company earned $176.8 million, or 30 cents a share, vs. $132.3 million, or 22 cents a share at this time last year.

Excluding stock option compensation costs, Nvidia said it earned 36 cents a share -- two cents shy of the average analyst expectation of 38 cents.

The miss owed to the pinched gross margin, which decreased to 44.6% in the first quarter from 45.7% in fourth quarter. The chipmaker had forecast that its gross margin would be flat to up slightly sequentially.

AMD's Burkett said the margin will increase one percentage point in the current quarter.

And while Nvidia's internal inventory increased roughly 17% sequentially to $420 million in the first quarter, Burkett said he was comfortable with the stockpile, and said inventory could increase in the coming months as Nvidia brings new products to market and prepares for the seasonally strong part of the year.

In the current quarter, Burkett said he has no reason to believe that sales will be anything other than seasonal, which he defined as meaning a 5% decline. That would suggest revenue of $1.09 billion -- slightly below the average analyst estimate of $1.12 billion according to Thomson Reuters.