Nvidia (NVDA) Q3 2023 earnings

Bernstein's Stacy Rasgon weighs in on Nvidia's Q4 earnings

Nvidia reported fiscal third-quarter outcomes for the interval ending in October on Wednesday, with gross sales beating analysts’ expectations however earnings per share falling flat.

Nvidia shares rose 1% in prolonged buying and selling.

This is how the corporate did towards Refinitiv’s consensus estimates:

  • EPS: $0.58, adjusted, vs. $0.69 anticipated
  • revenue: $5.93 million, versus $5.77 million anticipated

Nvidia stated it anticipated about $6 billion in fourth-quarter gross sales, beneath Refinitiv’s consensus estimate of $6.09 billion.

Third-quarter gross margin fell 11.6 proportion factors to 53.6%, which the corporate attributed to charging stock as a consequence of weak demand for knowledge heart chips in China. Revenues have been down 17% year-on-year.

NVIDIA DRIVE Thor, the corporate’s next-generation central pc for autonomous and assisted driving and in-car infotainment, is proven in a brochure picture obtained on September 20, 2022.

Nvidia | through Reuters

Nvidia expects gross margin for the present quarter to get well to between 63.2% and 66.0%.

Nvidia is intently watched by analysts and traders as a number one indicator of the well being of the know-how business, as a result of it sells chips and software program to many PC makers and cloud suppliers.

In current months, chip firms akin to Nvidia have been decreasing order expectations and warning that their clients are overburdened with pc elements. In Could, Nvidia stated it could gradual its hiring tempo.

Nvidia CEO Jensen Huang stated in a press release that the corporate was “adapting to the macro surroundings.”

The PC gaming market is slowing down after the pandemic increase. Nvidia graphics playing cards, which have been onerous to search out in inventory in 2020 and 2021, at the moment are seeing retail reductions. Nvidia additionally just lately introduced a brand new era of graphics playing cards which are priced increased than earlier fashions.

Nvidia’s gaming division reported $1.57 billion in gross sales, down 51% 12 months over 12 months. Nvidia stated it was promoting much less to retailers as a result of they’ve extra stock than present demand. He stated macroeconomic circumstances, along with China’s zero-covid coverage, are hurting shopper demand.

A brighter spot was Nvidia’s knowledge heart enterprise, which reported $3.83 billion in gross sales, up 31% 12 months over 12 months. Nvidia attributed the expansion to gross sales to US cloud service suppliers and shopper web firms.

In July, Nvidia lower its steerage for the October quarter. Nvidia additionally warned in August that it could be hit by US export controls that forestall some quick AI chips from being offered to Chinese language firms. In November, it revealed a brand new chip that’s designed to fulfill US export guidelines.

Nvidia stated diminished gross sales of the banned GPUs in China could be largely offset by its different merchandise.

Nvidia has some smaller enterprise strains, together with skilled show and automotive chips. They’re small. Skilled viewing was down 65% year-over-year to $200 million. Automotive grew 86%, however remains to be very small, reporting $251 million in gross sales.

The corporate’s “different” class reported income of $73 million. Consists of Nvidia Cryptocurrency Mining (CMP) chips. The corporate stated gross sales of CMP chips have been “nominal.”

“We imagine that the current transition within the verification of Ethereum cryptocurrency transactions from proof-of-work to proof-of-stake has diminished the usefulness of GPUs for cryptocurrency mining,” the corporate stated.

Nvidia stated it spent $3.75 billion on share buybacks and dividends through the quarter.

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