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Nvidia (NVDA) earnings Q3 2023

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Nvidia reported fiscal third-quarter results on Wednesday for the period ending in October with sales beating analyst expectations but earnings per share coming in light.

Nvidia stock rose 1% in prolonged trading.

Here’s how the corporate did versus Refinitiv consensus estimates:

  • EPS: $0.58, adjusted, versus $0.69 expected
  • Revenue: $5.93 billion, versus $5.77 billion expected

Nvidia said it expected about $6 billion in sales within the fourth quarter, lower than Refinitiv consensus estimates of $6.09 billion.

Gross margin for the third quarter was down 11.6 percentage points to 53.6%, which the corporate attributed to taking a list charge due to low demand for data center chips in China. Revenue was down 17% on a year-on-year basis.

NVIDIA DRIVE Thor, the corporate’s next-generation centralized computer for autonomous and assisted driving and in-car infotainment, is shown in a handout image obtained September 20, 2022.

Nvidia | via Reuters

Nvidia expects gross margin for the present quarter to get better to between 63.2% and 66.0%.

Nvidia is closely watched by analysts and investors as a number one indicator for the health of the technology industry, since it sells chips and software to so many PC makers and cloud providers.

Prior to now few months, chip corporations like Nvidia have been slashing order expectations and warning that their customers are overstocked with computer parts. In May, Nvidia said it will slow the pace of its hiring.

Nvidia CEO Jensen Huang said in an announcement that the corporate was “adapting to the macro environment.”

The PC gaming market is slowing after the pandemic boom. Nvidia graphics cards, which had been hard to search out in stock in 2020 and 2021, are actually seeing retail discounts. Nvidia also recently announced a latest generation of graphics cards that are priced higher than the previous models.

Nvidia’s gaming division reported $1.57 billion in sales, down 51% year-over-year. Nvidia said it was selling less to retailers because they’ve more inventory than current demand. It said that macroeconomic conditions, along with China’s zero-Covid policy, are hurting consumer demand.

A brighter spot was Nvidia’s data center business, which reported $3.83 billion in sales, up 31% year-over-year. Nvidia attributed the expansion to sales to U.S. cloud service providers and consumer web corporations.

In July, Nvidia cut its guidance for the October quarter. Nvidia also warned in August that it will be hit by U.S. export controls that prevent some fast artificial intelligence chips from being sold to Chinese corporations. In November, it revealed a latest chip that’s designed to fulfill the U.S. export rules.

Nvidia said that the reduced sales from the GPUs barred in China could be largely offset by its alternative products.

Nvidia has a number of smaller lines of business, including skilled visualization and automotive chips. They’re small. Skilled visualization shrunk 65% on an annual basis to $200 million. Automotive grew 86% but continues to be very small, reporting $251 million in sales.

The corporate’s “other” category reported $73 million in revenue. It includes Nvidia’s cryptocurrency mining chips (CMP). The corporate said sales from the CMP chips were “nominal.”

“We consider the recent transition in verifying Ethereum cryptocurrency transactions from proof-of-work to proof-of-stake has reduced the utility of GPUs for cryptocurrency mining,” the corporate said.

Nvidia said it spent $3.75 billion on share repurchases and dividends through the quarter.

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