Nvidia Warns Second-Quarter Earnings Will Decline on Gaming Weakness – Hardware

Nvidia warned on Monday that its second-quarter revenue will drop 19% from the previous quarter on a slump in its gaming business, and the chip designer’s share price fell about 8%.

The company reported preliminary results for the second quarter just days after chip makers Intel, Qualcomm and Sony predicted weak on-demand sales of personal computers and mobile phones.

The gaming industry is considered recession-proof, but is starting to weaken as consumers consider buying discretionary goods such as video game consoles.

Last month, Xbox maker Microsoft reported sluggish gaming revenue, while PlayStation maker Sony cut its forecasts.

Chip makers are also suffering worsening supply chain disruptions ahead of the major holiday period due to the conflict between Russia and Ukraine and the suppression of COVID-19 at their Chinese manufacturing sites in recent months.

Nvidia said preliminary earnings for its gaming division, which includes sales of high-end graphics cards for desktops and laptops, fell 44% from the previous quarter to $2 billion (A$2.9 billion).

Piper Sandler analyst Harsh Kumar said the size of the decline was surprising and not a warning to the game’s earnings.

JPMorgan analyst Sandeep Deshpande said, “Nvidia’s gaming slowdown likely includes chips it sells to the cryptocurrency market, so the magnitude of the slowdown is very high.” said.

Nvidia has increased its supply of cryptocurrency mining processors, bringing in $266 million in the second quarter of last year.

The company is expected to report second-quarter revenue of approximately US$6.7 billion on August 24.

According to Refinitiv’s IBES data, analysts estimated revenue was US$8.1 billion, with a contribution from games of US$3.12 billion.

Nvidia said data center revenue hit a record but fell short of expectations due to supply disruptions, and quarterly results included a $1.32 billion charge from excess inventory and anticipatory demand commitments. I added that I could.

Shares of chip makers, including rivals AMD and Qualcomm, also fell on Monday.