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Nvidia Profit Seen Down Amid Crypto Crash, Tech Cuts

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important point

  • Nvidia is expected to post adjusted earnings of 71 cents per share for the third quarter late Nov. 16.
  • Revenue is down 18% year-on-year amid declining demand from cryptocurrency miners.
  • Ethereum’s transition from proof of work to proof of stake in September has reduced demand for mining GPUs and graphics processing units.
  • Nvidia’s data center sales dipped in the second quarter, but remain a key driver of growth for the chip developer.
  • New US export restrictions on sales to China could push Nvidia’s annual revenue to $400 million.

NVIDIA (NVDA) heads to its quarterly earnings call on Nov. 16. computing chip Economic slowdown in Europe and China, hit by slump in US Cryptocurrency.

Nvidia’s stock has fallen 45% this year (see chart below). Analysts expect third-quarter earnings to decline 18% year-over-year. The saving grace is that sales of chips for data centers have grown significantly. e-commerce and cloud-based applications. The segment’s performance was important to the company’s results for the quarter through October, earning 71 cents per share on an adjusted basis, compared with $1.17 in the same period last year, based on analyst consensus estimates. It is expected to show that

Another key to the company’s performance is that demand for Nvidia’s processors has been driven by the recent crash in cryptocurrency prices and, more importantly, Ethereum’s September Proof of Stake Method blockchain Validation frommining,” or computerized math problem solving. As of May, ethereum accounted for 97% of the mining revenue generated by Graphics Processing Unit (GPU) By some estimates, like Nvidia.

Nvidia has said it cannot estimate the contribution of cryptocurrency mining to processor demand, but the company’s chief financial officer acknowledged that it declined in the quarter ended July 31. On the same conference call, Nvidia’s CEO said the demand for cryptocurrency mining is driving the price of the company’s products. Analysts at Robert W. Baird & Co. estimate that crypto miners accounted for 35% of demand for graphics processing equipment at its peak. In a sign that cryptocurrency demand continues to weaken, Nvidia has reportedly released an update to one of its graphics processors without the hashrate limit it previously used to make the product less attractive to miners. increase.

Nvidia also recently released new graphics processors, especially for Chinese customers, as it seeks to recoup some $400 million in sales that have been jeopardized by recent US export restrictions. Analysts may want more information about the company’s long-term plans in China given deteriorating U.S.-China relations.

Data center growth has been resilient to economic headwinds in recent quarters, but analysts have noted softening since. Recent cost savings By some of the biggest tech companies who are Nvidia customers. Amazon Web ServicesA major operator of data centers.AMZN) then checked that it was hiring freezewill reportedly lay off about 10,000 workers.

meta platform (meta) recently announced that they are the owners of Facebook and Instagram. Laid off more than 11,000 employeesalthough aggressive Data center investment plan Remains positive for Nvidia.

Source: Trading View.

Source: Trading View

Nvidia earnings history

Company’s FY2023 Q2 Results Missed Analyst Estimates Despite Nvidia advance announcement A disappointing number from two weeks ago. Revenue hit him at a cost of $1.34 billion. This was primarily due to inventory discounting amid lower demand expectations. Gaming segment revenue plummeted 44% quarter-on-quarter in the second quarter, accounting for just over half of data center revenue.

In that report, Nvidia predicted a 2% give or take on third-quarter sales of $5.9 billion, while gaming revenues involving cryptocurrencies are expected to decline further. Data center sales have been steadily increasing since the second quarter. The stock reversed its after-hours decline, rising 4% the next day, but has fallen further since then.

Company’s FY2023 Q1 results, reported in May and exceeded estimates. Shares rose 5.2% on the following day.

Nvidia Key Stats

Q3 FY2023
Q3 FY2022 Q3 FY2021
Adjusted profit
per share ($)
0.71 1.17 0.73
Earnings ($B) 5.8 7.1 4.7
Data Center Revenue ($B) 3.8 2.9 1.9

sauce: visible alphaNvidia, and News Reports

key metrics

Nvidia’s Data Center segment includes the sale of processors for data center platforms and systems for artificial intelligence (AI), high performance computing and accelerated computing. So while we rely primarily on enterprise customers, the end market for gaming processors is heavily dependent on gamers and other retail buyers.

Data center processors to accelerate computing for the most intensive workloads such as AI, data analytics, graphics and scientific computing across hyperscale, cloud, enterprise, public sector and edge data centers Designed. Products include energy-efficient GPUs, data processing units (DPUs), interconnects and systems, CUDA programming models, and software libraries and development kits.

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