Nvidia Corp. (NVDA) - Get Report shares edged lower Friday after the gaming chipmaker forecast lighter-than-expected near-term revenues that offset a solid third quarter earnings report. 

Nvidia said non-GAAP earnings for the three months ending on October 27, the group's fiscal third quarter, came in at $1.78 per share, down 3.3% from the same period last year but firmly ahead of the Street consensus forecast of $1.58 per share. Group revenues, Nvidia said, fell 5.5% from last year to $3.014 billion, just ahead of analysts' forecasts of a $2.92 billion tally.

Looking into the final months of its 2020 fiscal year, Nivida said it sees fourth quarter revenues in the region of $2.95 billion, with a margin for error of 2%, and an improving non-GAAP gross margin of 64.5%, with a 50 basis point error margin. Data center chips, Nvidia said, are likely to be the key growth driver as demand for gaming hits a traditional seasonal decline.

"We had a strong Q3. We're going to see a much stronger Q4. And the foundation of that is AI, it's deep learning inference," CEO Jensen Huang told investors on a conference call late Thursday. "That is -- this deep learning inference is understandably going to be one of the largest computer industry opportunities."

"And the reason for that is because the computation intensity is so high and for the very first time for the very first time aside from computer graphics aside from computer graphics, this mode of software is not really practical without accelerators," he added.

Nvidia shares were marked 0.6% lower at the start of trading Friday to change hands at $209.51 each, a move that would leave the stock with a year-to-date gain of 55.7% and a market value of around $127 billion.

"We're adjusting our 4Q and FY21 revenue estimates moderately lower, though we're raising our gross margin assumptions (based on 3Q results and 4Q guidance), which moderately raises our FY21 EPS estimate," said KeyBanc Capital Markets analyst Weston Twigg, who carries a sector weight rating on the stock.

"While Nvidia has compelling growth opportunities, it remains richly valued (32x our CY20 EPS estimate) compared to peers and intense competition makes winners in the emerging edge and inference markets unclear," he added. "Gaming should remain the largest source of revenue, likely growing HSD annually over time."