Even though chip-maker Nvidia's revenue was down 24% year over year, its shares rose by almost 8% on Thursday during trading hours. This is primarily because the company outperformed in most other aspects in its earnings report.

Earnings stood at 80 cents per share as opposed to predictions of 75 cents per share, and revenue overall was $2.21 billion, marginally beating the $2.2 billion expected by analysts. What's more impressive is that the GAAP EPS was 92 cents, which highly exceeded predictions of 51 cents.

"This was a turbulent close to what had been a great year," Nvidia's CEO Jensen Huang said in a company-issued statement. "The combination of post-crypto excess channel inventory and recent deteriorating end-market conditions drove a disappointing quarter."

The lower values are mostly the result of excess inventory from last quarter. This was a particular problem in the gaming and data domains, where sales have been slow in high-density markets such as China.

"Hyperscale and cloud purchases declined both sequentially and year-on-year as several customers paused at the end of the year," Nvidia's chief financial officer, Colette Kress, said in a statement to analysts on Thursday. "We believe the pause is temporary."

This may only be a temporary pause because Nvidia has its GPU product pipeline ready to dole out to big companies like Amazon (AMZN  ) and Microsoft (MSFT  ), which is currently in the inference stage. Adoption of this technology would have immense applications in the AI world, and could set Nvidia up for long-term success by solidifying meaningful partnerships with companies that have immeasurable opportunities to scale.

"As we look past Q1 we expect the channel inventory correction to be behind us and our business to have bottomed," said Kress.

It seems that investors have chosen to believe Kress, in light of the rising share price. They appear to have more faith in Nvidia's long-term scope than its current financials, which are healthy but need some work.

"Despite this setback, Nvidia's fundamental position and the markets we serve are strong," Huang continued, affirming the scope for future growth. "The accelerated computing platform we pioneered is central to some of world's most important and fastest growing industries - from artificial intelligence to autonomous vehicles to robotics. We fully expect to return to sustained growth."