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Investing.com – Nvidia reported first-quarter earnings that topped analysts’ expectations Thursday and delivered in-line guidance even as the chipmaker’s gaming segment posted a sharp fall in sales.

Nvidia, whose graphics chips are used in personal computers, video games and other products, guided second-quarter revenue of $2.55 billion, plus or minus 2%, implying a year-over-year decline of 18.3%. Analysts surveyed by Refinitiv expected the company to forecast second-quarter revenue of $2.54 billion.

Nvidia (NASDAQ:) reported earnings per share of $0.88 on revenue of $2.22 billion, above consensus expectations for earnings of $0.62 a share on revenue of $2.2 billion. That compared to earnings per share of $1.98 on revenue of $3.21 billion in the same period a year earlier.

Nvidia shares gained about 5.7% to trade at $169.34 in after-hours trading following the report. The shares were up 0.4% in regular trading. The stock is up 20% this year.

The earnings beat comes even as gaming revenues, which account for the bulk of total revenues, fell 39% to $1.06 billion. But the company continued to express optimism on the gaming front.

“Nvidia is back on an upward trajectory,” said Jensen Huang, founder and CEO, in a statement. “We’ve returned to growth in gaming, with nearly 100 new GeForce Max-Q laptops shipping. And Nvidia RTX has gained broad industry support, making ray tracing the standard for next-generation gaming.”

The company’s data center business segment saw revenue slip 10% to $634 million as the application of artificial intelligence continued to accelerate despite the near-term pause in demand from hyperscale customers, the company said.

“AI adoption is accelerating in the world’s largest industries, moving beyond the cloud to the edge where AI processing has to be instantaneous. We’re excited about our pending acquisition of Mellanox, which will help us drive data center architecture for high performance computing and AI from the cloud to the edge,” Huang said.

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