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NVIDIA Profit Plunges, Promises Gaming Growth

Nvidia’s profit plunged 68 per cent this quarter, but still beat analysts expectations thanks to a growing demand for its gaming GPU chips and higher sales to data centres, sending its shares up 7%.

The company forecast revenue of US$2.55 billion, above analysts’ expectations of US$2.53 billion, according to IBES data from Refinitiv.

Total revenue fell to US$2.22 billion down 31% YoY in Q1, with gaming falling 39% YoY.

Gaming rose 11 per cent over the previous quarter to $1.06 billion in revenue surpassing estimates of $933.5 million from research firm Factset.

It’s the second quarter in a row that revenue for the company has fallen, despite which the chipmaker believes it is “back on an upward trajectory.”

Nvidia’s GAAP net income fell to US$394 million, 64 cents per share, in Q1 ended April 28.

Excluding items, it fell to $543 million or 88 cents per share, while analysts had expected a profit of 81 cents per share.

The chipmaker forecast Q2 revenue of US$2.55 billion, above Wall Street estimates of US$2.54 billion, as it predicts an increased demand for its graphics chips in the gaming market.

Nvidia is moving into newer growth areas such as data centres — it recently announced its intention to acquire Israeli networking company Mellanox for almost $7 billion — however, gaming graphics remain the companies key business.

Nevertheless, Stifel analyst, Kevin Cassidy, advised that its gaming revenue will be down 14% in the full 2020 fiscal year due to increased competition from AMD and others.

Nvidia expects continued growth in sales of its gaming chips in 2019 but advised that “while improving”, CPU shortages may affect numbers.

The chipmaker’s stock is up 20% since the start of the year but remains 45% off its record high reached in October 2018.

Nvidia’s next-gen graphics chips are present in many of the top-end gaming laptops hitting the market in 2019 and with the gaming market continuing to expand, Nvidia is well-placed to make back its numbers.

Read the full report here.

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