Nvidia on Monday warned its second-quarter revenue would drop by 19 percent from the prior quarter on weakness in its gaming business, sending the chip designer's shares down about 8 percent.
The company reported preliminary results for the
second-quarter, just days after chipmaker Intel, Qualcomm, and Sony forecast
weak sales on demand concerns for personal computers and phones.
The gaming industry, largely considered to be recession
proof, is beginning weaken as consumers weigh purchases of discretionary items
such as video-game consoles.
Last month, Xbox-maker Microsoft reported a slump in gaming
revenue while PlayStation-maker Sony trimmed its forecast.
Chipmakers have also been struggling with worsening
supply-chain snarls ahead of the key holiday period due to the Russia-Ukraine
conflict and COVID-19 curbs in China's manufacturing hubs in recent months.
Nvidia said its gaming unit's preliminary revenue, which
includes sales of high-end graphic cards for desktops and laptops, declined 44
percent from the previous quarter to $2.04 billion.
Piper Sandler analyst Harsh Kumar said the magnitude of the
decline was surprising, not the warning on gaming revenue.
"Nvidia's gaming slowdown likely includes the chips
they sell to the crypto market which has been weak hence the extent of the
slowdown is so significant," JP Morgan analyst Sandeep Deshpande said in a
note.
Nvidia increased the supply of cryptocurrency mining
processors, which brought in $266 million in the second quarter last year.
The company expects to report overall second-quarter revenue
of about $6.70 billion on August 24.
Analysts had estimated revenue of $8.1 billion, with
contribution from gaming at $3.12 billion, according to IBES data from
Refinitiv.
Data Center revenue hit a record, but fell short of
estimates due to supply disruptions, Nvidia said, adding that quarterly results
will include charges of $1.32 billion due to excess inventory and commitments
in anticipation of demand.
Shares of chipmakers including peers AMD and Qualcomm also
fell on Monday. © Reuters
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