Tonight, let’s discuss NVIDIA, the perennial darling of tech stocks, and its earnings shock.
On August 9, before market opening, NVIDIA issued a downward revision to its earnings forecast. Just last week, a peer company $Advanced Micro Devices (AMD.US)$ reported better-than-expected revenue, making NVIDIA’s earnings this quarter a surprise to the market.
The company expects second-quarter revenue to be approximately $6.7 billion, a 19% decrease quarter-over-quarter and a 3% increase year-over-year, primarily reflecting weaker-than-expected gaming revenue. Gaming revenue for this quarter was $2.04 billion, down 44% quarter-over-quarter and 33% year-over-year.
Gaming revenue significantly missed expectations this quarter, directly leading to a year-over-year growth rate of 3%, which marks the lowest level in nearly ten quarters. In the next quarter, under high base pressure, the year-over-year growth is likely to turn negative.
The data center segment maintained steady growth but still came in below expectations. Data center revenue reached $3.81 billion, increasing 1% quarter-over-quarter and 61% year-over-year. Compared to the revenue expectation of $8.1 billion provided during the May earnings report, the company explained that the shortfall was mainly due to declining sales of gaming products, reflecting possible reductions in channel partners’ sales amid macroeconomic headwinds.In addition to reduced sales, the company implemented pricing programs with channel partners to reflect challenging market conditions expected to persist through the third quarter.
As demand is expected to decline...