Nvidia Corp’s quarterly revenue missed its projections by more than US$1 billion, surprising investors and piling on more evidence that demand for electronic components is drying up quickly after a two-year boom.
Fiscal second-quarter revenue was about US$6.7 billion, down from its earlier projection of US$8.1 billion, the company said in a statement on Monday.
Shares of the most valuable publicly traded chipmaker fell 6.3 percent to US$177.93, their worst decline in nearly two months.
Nvidia’s report underscored a squeeze rippling across the industry: Declining consumer spending, growing inflation and a push to return to offices have reduced purchases of PCs. Intel Corp, Western Digital Corp and other companies that depend on PC sales have reported sharp declines in demand for their products.
Nvidia’s graphics chips are a staple of high-end PCs used to get the most realistic gaming experience. Most of the major gaming companies have reported falling sales or weaker outlooks this year, from PlayStation maker Sony Group Corp to Microsoft Corp, which sells the Xbox console. The add-in cards made by Nvidia also are a key part of systems used by currency miners, which make the company’s earnings vulnerable to fluctuations in those markets.
“Our gaming product sell-through projections declined significantly as the quarter progressed,” Nvidia CEO Jensen Huang (黃仁勳) said in the statement. “As we expect the macroeconomic conditions affecting sell-through to continue, we took actions with our gaming partners to adjust channel prices and inventory.”
Nvidia had already flagged strains on its performance in its second quarter, which ended on July 31. The Santa Clara, California-based company said in May that COVID-19 lockdowns in China disrupted production and transportation lines, making it harder to capitalize on demand for chips. Russia’s invasion of Ukraine also weighed on its outlook, and together the problems were expected to cut sales by about US$500 million in the fiscal second quarter, Nvidia said.
Gaming revenue in the fiscal second quarter fell 44 percent from the previous quarter and 33 percent from a year earlier to US$2.04 billion, Nvidia said.
While revenue from its data center business increased 61 percent to US$3.81 billion, it fell short of Nvidia’s projections, the company said.
Performance was “impacted by supply chain disruptions,” it said.
The quarterly results would also include about US$1.32 billion of charges, “primarily for inventory and related reserves, based on revised expectations of future demand,” Nvidia said.
“The significant charges incurred in the quarter reflect previous long-term purchase commitments we made during a time of severe component shortages and our current expectation of ongoing macroeconomic uncertainty,” chief financial officer Colette Kress said.
Nvidia is to give its full report and projections for the current period on Aug. 24.
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