Nvidia Up on Blowout Numbers

NEW YORK (TheStreet) -- Nvidia (NVDA Quote) shares rose Thursday as the chip shop flew by third-quarter financial targets.

The graphics chipmaker posted adjusted earnings, excluding one-time items, of 19 cents a share, down a penny from the 20 cent pro forma profit in the year-ago quarter, but far better than the dime profit analysts were looking for, according to Yahoo! Finance.

Sales for the fiscal third quarter ended last month were, $903.2, up from the $897.6 million booked for the same period last year and well above the $838.1 million in revenue analysts were expecting.

Gross margins widened to 43.4% from 20.2% in the prior quarter and 41% in the same period a year ago. Analysts were looking for margins of 37%.

"We continued to make progress in the third quarter with healthy market demand across the board," CEO Jen-Hsun Huang said in a press release Thursday.

Looking ahead, Nvidia says it expects fourth-quarter sales to be up 2% sequentially from the third quarter. Analysts were looking for a 3.5% sequential increase.

In the most recent quarter, Nvidia says its Tegra chip was built into to gadgets: Microsoft's (MSFT Quote) Zune portable media player and Samsung's YP-M1 media device.

The big performance comes just two days after Nvidia and a number of chipmakers were downgraded by Morgan Stanley.

On Tuesday, Morgan Stanley downgraded Nvidia tp sell on concerns that chip supplies were running ahead of demand.

The Morgan analysts also wrote that Nvidia faces challenges as it tries to shift its business toward portable devices and phones from PCs. Nvidia is also seeing more competition from chip rivals Intel (INTC Quote) and AMD (AMD Quote) as the PC chip shops take aim at Nvidia graphics chip market.