December 5, 2022

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Nvidia (NVDA) earnings Q3 2023

3 min read

Nvidia on Wednesday reported third-quarter results for the period ended October, with sales beating analysts’ expectations but showing earnings per share.

Nvidia shares rose 1% in extended trading.

Here’s how the company compared to Refinitiv’s consensus estimates:

EPS: $0.58 adjusted vs. $0.69 exp. Revenue: $5.93 billion vs. $5.77 billion exp

Nvidia said it expects revenue of about $6 billion in the fourth quarter, which is below Refinitiv’s consensus estimate of $6.09 billion.

Gross margin for the third quarter fell 11.6 percentage points to 53.6%, which the company attributed to an inventory burden due to low demand for data center chips in China. Revenue fell 17% year over year.

NVIDIA DRIVE Thor, the company’s next-generation centralized computer for autonomous and assisted driving and in-car infotainment, is shown in a handout image received on September 20, 2022.

NVIDIA | via Reuters

Nvidia expects gross margin to recover to 63.2% to 66.0% for the current quarter.

Nvidia is closely watched by analysts and investors as a leading indicator of the tech industry’s health because it sells chips and software to so many PC makers and cloud providers.

In recent months, chipmakers like Nvidia have lowered order expectations, warning their customers are overstocked with computer parts. In May, Nvidia said it would slow down the pace on hiring.

Nvidia CEO Jensen Huang said in a statement that the company is “adapting to the macro environment.”

PC Gaming Market Slows After Pandemic Boom. Nvidia graphics cards, which were hard to find in stock in 2020 and 2021, are now getting retail discounts. Nvidia also recently announced a new generation of graphics cards that are priced higher than the previous models.

Nvidia’s gaming division reported revenue of $1.57 billion, down 51% year over year. Nvidia said it’s selling less to retailers because they have more inventory than current demand. It said macroeconomic conditions are hurting consumer demand on top of China’s zero-Covid policy.

A bright spot was Nvidia’s data center business, which posted revenue of $3.83 billion, up 31% year over year. Nvidia attributed the growth to sales to US cloud service providers and consumer internet companies.

In July, Nvidia lowered its forecast for the October quarter. Nvidia also warned in August it would be hit by US export controls that prevent some fast artificial intelligence chips from being sold to Chinese companies. In November, a new chip was introduced that is supposed to meet US export regulations.

Nvidia said lower sales of its China-locked GPUs were mostly offset by its alternative products.

Nvidia has a few smaller businesses, including professional visualization and automotive chips. you are small Professional visualization shrank 65% annually to $200 million. Automotive grew 86% but is still tiny with sales of $251 million.

The company’s Other category posted sales of $73 million. It contains Nvidia cryptocurrency mining chips (CMP). The company said sales of the CMP chips were “nominal.”

“We believe that the recent transition in verification of Ethereum cryptocurrency transactions from proof-of-work to proof-of-stake has reduced the usefulness of GPUs for cryptocurrency mining,” the company said.

Nvidia said it spent $3.75 billion on share buybacks and dividends during the quarter.

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