Nvidia hints at lower revenue in Q2 2022 amid weak gaming activity

Nvidia hints at lower revenue in Q2 2022 amid weak gaming activity

Nvidia hints at lower revenue in Q2 2022 amid weak gaming activity

Nvidia on Monday warned that its second-quarter revenue would fall 19% from the previous quarter due to weakness in its gaming business, sending the chip designer’s stock down about 8%.

The company released preliminary second-quarter results, just days after chipmaker Intel, Qualcomm and Sony forecast weak sales due to demand issues for personal computers and phones.

The gaming industry, widely seen as recession-proof, is starting to weaken as consumers weigh up purchases of discretionary items such as video game consoles.

Last month, Xbox maker Microsoft reported lower gaming revenue while PlayStation maker Sony cut its forecast.

Chipmakers have also grappled with worsening supply chain issues ahead of the key holiday period due to the Russian-Ukrainian conflict and COVID-19 restrictions in Chinese manufacturing hubs in recent months.

Nvidia said its gaming unit’s preliminary revenue, which includes sales of high-end graphics cards for desktops and laptops, was down 44% from the prior quarter to $2.04 billion. dollars (about 16,240 crore rupees).

Piper Sandler analyst Harsh Kumar said the size of the decline was surprising, not the gaming revenue warning.

“Nvidia’s gaming slowdown likely includes the chips they sell to the crypto market which has been weak, hence the magnitude of the slowdown is so significant,” JP Morgan analyst Sandeep Deshpande said in a statement. note.

Nvidia increased the supply of cryptocurrency mining processors, which brought in $266 million (about Rs 2,120 crore) in the second quarter of last year.

The company expects to report aggregate revenue of around $6.70 billion (approximately Rs. 53,350 crore) in the second quarter on August 24.

Analysts had estimated revenue at $8.1 billion (about Rs.64,500 crore), with gaming contributing $3.12 billion (about Rs.24,840 crore), according to IBES data from Refinitiv.

Data center revenue hit a record but was lower than estimated due to supply disruptions, Nvidia said, adding that the quarterly results will include charges of $1.32 billion (about 10,510 crore). rupees) due to excess inventory and commitments in anticipation of demand.

Shares of chipmakers, including their counterparts AMD and Qualcomm, also fell on Monday.

© Thomson Reuters 2022

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