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Nvidia earnings have a hit as game graphics sales weaken

Nvidia Grace CPU

Nvidia Grace CPU

Image Credit: Nvidia

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Nvidia reported earnings for the next fiscal quarter ended July 31 amid a slowdown in PC and gaming sales. The financial results for revenues met diminished expectations that have been set after Nvidia warned that its quarterly results will be weaker than expected.

The companys business in game graphics and AI chips saw huge growth in 2020 and 2021 through the pandemic, however now things are slowing in gaming. In after-hours trading, Nvidias stock is down 3% to $167.58 a share.

Revenues came in at $6.7 billion, up 3% from the year ago and down 19% from the prior quarter. Analysts expected revenue of $6.7 billion versus $6.5 billion this past year. Earnings per share came in at 26 cents on a GAAP basis, in comparison to expectations of 35 cents a share.

For the datacenter, analysts expected $3.8 billion versus $24 billion this past year. And for gaming they expected $2.0 billion versus $3.1 billion this past year.

Nvidia released its preliminary earnings on August 8, when it warned investors that the business would miss alone expectations for the quarter as gaming sales weakened. Nvidia saw softness because of the war in Ukraine and a slowdown in China, with macroeconomic slowdowns all over the world affecting consumer demand in a poor way. The business said it really is struggling to know what impact slipping demand for crypto mining had on the low revenues.

GAAP earnings per diluted share for the quarter were 26 cents down 72% from the year ago and down 59% from the prior quarter. Non-GAAP earnings per diluted share were 51 cents, down 51% from the year ago and down 63% from the prior quarter.

We have been navigating our supply chain transitions in a challenging macro environment and we’ll complete this, said Jensen Huang, founder and CEO of Nvidia, in a statement. Accelerated computing and AI, the pioneering work of our company, are transforming industries. Automotive is now a tech industry and is on the right track to be our next billion-dollar business. Advances in AI are driving our datacenter business while accelerating breakthroughs in fields from drug discovery to climate science to robotics.

He added, I anticipate next months GTC conference, where we shall share new advances in RTX, along with breakthroughs in AI and the metaverse, another evolution of the web.Join us.

Through the second quarter of fiscal 2023, NVIDIA returned to shareholders $3.44 billion in share repurchases and cash dividends, carrying out a return of $2.10 billion in the initial quarter. The business has $11.93 billion remaining under its share repurchase authorization through December 2023. Nvidia plans to keep share repurchases this fiscal year.

Nvidia said it expects revenue for the 3rd fiscal quarter, which ends on October 31, to be $5.9 billion. Gaming and professional visualization revenue are anticipated to decline sequentially, as computer makers and channel partners reduce inventory levels to meet up current degrees of demand also to plan Nvidias next generation of chips. The business expects that decline to be partially offset by sequential growth in datacenter and automotive.

GAAP and non-GAAP gross margins are anticipated to be 62.4% and 65.0%, respectively, plus or minus 50 basis points.

Datacenter revenue

Second-quarter revenue was $3.81 billion, up 61% from the year ago or more 1% from the prior quarter.

Nvidia said Grace superchips are increasingly being used to generate HGX systems by a few of the worlds leading computer makers including Atos, Dell Technologies, Gigabyte, HPE, Inspur, Lenovo and Supermicro.

Gaming and visualization

Second-quarter revenue was $2.04 billion, down 33% from the year ago and down 44% from the prior quarter. Professional visualization second-quarter revenue was $496 million, down 4% from the year ago and down 20% from the prior quarter.

Announced a significant release of Omniverse with new frameworks, tools, apps and plugins, including 11 new connectors to the Omniverse USD ecosystem that bring the full total to 112. In addition, it cofounded the Metaverse Standards Forum to align with other members on the very best methods to build the foundations of the metaverse.

Automotive

Second-quarter revenue was $220 million, up 45% from the year ago or more 59% from the prior quarter.

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