Nvidia earnings miss, third-quarter forecast missed by $1 billion

Nvidia ( NVDA ) reported second-quarter financial earnings after the bell on Wednesday, missing earnings per share and missing third-quarter forecasts amid a slowdown in PC and gaming sales after the sectors’ explosive growth in 2020 and 2021. Here are the most important numbers from the report compared to what analysts expected.

  • Income: $6.7 billion vs. $6.7 billion expected

  • Adj. EPS: $0.51 vs. $0.53 expected

  • Data center: $3.8 billion vs. $3.8 billion expected

  • Games: $2.0 billion vs. $2.0 billion expected

The company’s net profit fell 72% year over year to $656 million. Shares of Nvidia fell more than 2% after the announcement.

Nvidia also reported a third-quarter revenue forecast that fell short of expectations, saying it would 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 macroeconomic environment and we will get through it,” said Nvidia founder and CEO Jensen Huang.

Nvidia released its preliminary earnings on August 8, warning investors that the company was set to miss its own expectations for the quarter as game sales continued to plummet.

According to the company’s numbers, the gaming segment’s revenue fell an impressive 33% year-on-year and 44% quarter-on-quarter. Other gaming companies such as Microsoft ( MSFT ), Sony ( SONY ), Nintendo ( NTDOY ) and others have also reported declines in gaming hardware spending.

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

Nvidia will report second-quarter earnings amid falling gaming and PC sales. (Photo by Justin Sullivan/Getty Images)

However, it’s not just individual graphics card sales that are hurting Nvidia. A slowdown in PC sales is also hurting the company. In Q4 2020, PC shipments rose 26.1% year over year to 91.6 million units, according to IDC.

Since then, however, sales have fallen significantly, with Gartner reporting a 12.6% decline in the second quarter of 2022. PC sales for the full year are expected to fall 9%.

While Nvidia’s gaming division is taking a hit, 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, needing high-powered chips that can handle multiple parallel processes with ease. And Nvidia’s graphics chips are winners in this regard.

Still, chip stocks have been hit during this year’s market selloff, with Nvidia down as much as 41% from a year ago and rivals Intel ( INTC ) and AMD ( AMD ) down 35% and 34 %, respectively. When they will turn the corner is still anyone’s guess.

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