Nvidia Signals Q2 Revenue Shortfall; Stock Falls 8 Percent
‘There are ebbs and flows, but Nvidia is investing billions of dollars in R&D and Jensen [Huang, Nvidia president and CEO] has an amazing vision,” says Bob Venero, president and CEO of Future Tech Enterprise. ‘Nobody‘s doing what they can do. They’re an incredibly good company and one we continue to watch.’
Nvidia CEO Jensen Huang
About two weeks before Nvidia is expected to release its second quarter results, the Santa Clara, Calif.-based chipmaker warned sales will fall short.
Second quarter revenue is expected to come in at $6.7 billion, down 19 percent from the previous quarter, according to a U.S. Securities and Exchange Commission filing Monday. The company previously said it expected $8.10 billion in sales for the quarter.
Nvidia said the miss primarily reflected weaker-than-forecasted gaming revenue. Gaming revenue was $2 billion, down 44 percent from Q1 and a drop of 33 percent from the prior year.
Nvidia’s stock sank more than 8 percent to $174.16 in trading Monday afternoon.
[RELATED: AMD’S RECORD Q2 FUELED BY DATA CENTER, EMBEDDED PRODUCTS]
Bob Venero, president and CEO of Future Tech Enterprise Inc., a Fort Lauderdale, Fla.-based IT solutions provider, said he’s not surprised by the results, but remains bullish on Nvidia.
“There are ebbs and flows, but Nvidia is investing billions of dollars in R&D and Jensen [Huang, Nvidia president and CEO] has an amazing vision,” he told CRN. “Nobody‘s doing what they can do. They’re an incredibly good company and one we continue to watch.”
Once considered recession-proof, the gaming industry is weakening as consumers reconsider purchases of discretionary items such as video-game consoles.
“Our gaming product sell-through projections declined significantly as the quarter progressed,” said Huang in a statement. “As we expect the macroeconomic conditions affecting sell-through to continue, we took actions with our gaming partners to adjust channel prices and inventory.”
He said the company has excellent products and is positioned to drive large and growing markets going forward.
“As we navigate these challenges, we remain focused on the once-in-a-generation opportunity to reinvent computing for the era of AI,” he added.
On the plus side, Nvidia’s data center revenue was $3.8 billion, up 1 percent from the first quarter and up 61 percent from the prior year.
Still, while those numbers are record setting, it fell short of estimates due to supply chain issues, Nvidia said. The company noted that quarterly results will also include a $1.3 billion charge due to excess inventory and commitments in anticipation of demand.
“The significant charges incurred in the quarter reflect previous long-term purchase commitments we made during a time of severe component shortages and our current expectation of ongoing macroeconomic uncertainty,” said Colette Kress, chief financial officer of Nvidia, in a statement.
Nvidia will officially report its quarterly results August 24.
Nvidia’s announcement comes on the heels of AMD’s record quarter with $6.6 billion in sales, helped by booming data center and embedded products revenue.
The chip giant recently reported second-quarter revenue of $6.6 billion, operating income of $526 million, and net income of $447 million and diluted earnings per share of 27 cents. Of note, embedded segment revenue for the quarter was $1.3 billion, up 2,228 percent year-over-year driven by the inclusion of embedded revenue from Xilinx, which AMD acquired earlier this year.
AMD’s data center segment revenue was $1.5 billion, up 83 percent year-over-year driven by strong sales of EPYC server processors.
Last month, Intel Corp. reported a $454 million loss for the second quarter based on a 22 percent dive in sales to $15.3 billion. In Q2 of last year, Intel reported earnings of $5.0 billion on sales of $19.6 billion. Intel shares were down 10 percent on Friday to $35.53 in the wake of the disappointing results.