The chip group Nvidia does not expect a speedy recovery after failed sales expectations. For the current quarter, Nvidia forecast revenue of approximately $5.9 billion on Wednesday. That would be well over a billion dollars less than in the same quarter last year – and also significantly less than analysts had expected. There’s one reason for that: it “backs up” in the dealers’ warehouses.
Revenue for the second quarter ended July was in line with preliminary figures presented, up 3 percent to $6.7 billion. Nvidia itself initially counted on more than eight billion dollars. The impetus for the development was a gaming company that was even weaker than expected. Nvidia’s graphics cards are used not only in PCs, whose sales are currently weakening, but also for the production of cryptocurrencies, which have become less lucrative as prices have fallen.
As announced, gaming revenue fell a third year over year to just over $2 billion. In contrast, in the data center business, revenue rose to $3.81 billion, an increase of 61 percent. Nvidia’s technology is used across the board for applications based on artificial intelligence – and the American group also relies heavily on the car trade as a supplier of computers for Mercedes, among others.
Graphics card crashes in warehouses
In short, quarterly earnings fell to $656 million, from a good $2.37 billion a year earlier. In a conference call with analysts, company chief Jensen Huang said, among other things, that Nvidia supplied significantly fewer graphics cards to the sales channels, so that the congestion in the dealers’ warehouses would be reduced. This can go on for “a few quarters”. Nvidia posted a $1.22 billion inventory write-off amid diminished demand expectations.
At the same time, Nvidia must honor commitments with suppliers it has long-term agreements with amid supply shortages in the early days of the coronavirus pandemic.
Investors dropped the stock about 4.6 percent in after-hours trading. The price rose sharply last year to a whopping $ 330 in November. It then went down and most recently it was at a good $160 at the May 2021 level.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
