Nvidia profit falls short, third-quarter forecast loses  billion

Nvidia profit falls short, third-quarter forecast loses $1 billion

Nvidia (NVDA) announced its fiscal second-quarter earnings after the bell on Wednesday, missing earnings per share and falling short of third-quarter forecasts amid a slowdown in PC and gaming sales following explosive growth that sectors have seen in 2020 and 2021. key figures from the report compared to what analysts expected.

  • Revenue: $6.7 billion versus $6.7 billion expected

  • adj. EPS: $0.51 versus $0.53 expected

  • data center: $3.8 billion versus $3.8 billion expected

  • Games: US$ 2.0 billion against US$ 2.0 billion expected

The company’s net income fell 72% year-over-year to $656 million. Nvidia shares fell more than 2% after the announcement.

Nvidia also announced third-quarter revenue projections that fell short of expectations, saying it will bring in $5.9 billion in the quarter. Wall Street was looking for $6.9 billion.

“We are navigating our supply chain transitions in a challenging macro environment and we will get through it,” said Nvidia founder and CEO Jensen Huang in a statement.

Nvidia released its preliminary results on August 8, warning investors that the company would not live up to its own expectations for the quarter as game sales continued to decline.

According to the company’s figures, revenue from the gaming segment was down 33% year-over-year and 44% quarter-on-quarter. Other gaming companies, including Microsoft (MSFT), Sony (SONY), Nintendo (NTDOY) and others, also reported a drop in gaming hardware spending.

SANTA CLARA, CALIFORNIA - MAY 25: A plaque is placed at Nvidia's headquarters on May 25, 2022 in Santa Clara, California.  Semiconductor maker Nvidia will report first-quarter earnings today after closing.  (Photo by Justin Sullivan/Getty Images)

Nvidia will report its second-quarter earnings amid slumping sales of games and PCs. (Photo by Justin Sullivan/Getty Images)

It’s not just sales of individual graphics cards that are hurting Nvidia. The slowdown in PC sales is also hurting the company. In the fourth quarter of 2020, PC shipments grew 26.1% year-over-year to 91.6 million units, according to IDC.

Since then, however, sales have dropped considerably, with Gartner reporting a 12.6% decline in Q2 2022. Full-year PC sales are expected to decline 9%.

While Nvidia’s gaming segment is suffering, the company said its data center business grew 61% in the quarter. The data center segment is Nvidia’s main growth engine, as companies increasingly turn to machine learning and artificial intelligence, they need high-powered chips that can handle multiple parallel processes with ease. And Nvidia’s graphics chips are winners in this regard.

Still, chip inventories took a hit during this year’s market sell-off, with Nvidia down as much as 41% year-to-date and competitors Intel (INTC) and AMD (AMD) falling 35% and 34%, respectively. When they will turn the corner is anyone’s guess.

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