Nvidia missed its own sales forecast for the period from May to July 2022 by a whopping 1.4 billion US dollars or a good 17 percent. The gaming division around the GeForce RTX 3000 graphics card series is to blame, which collapsed by 44 percent to $ 2.04 billion within a quarter.
Nvidia untypically reveals this in preliminary business figures. Sales are expected to be $6.7 billion and the gross margin to fall from 65.1 to 43.7 percent. Only the data center division around GPU accelerators and network chips prevented worse with a turnover of 3.81 billion US dollars – year-on-year it grew by 61 percent.
Breakdown of Nvidia’s revenue (in billions of US dollars; preliminary results)
Division 2nd Fiscal Quarter 2023 Quarterly Comparison Year-on-Year Gaming (GeForce) 2.04 -44% -33% Data Center 3.81 +1% +61% Professional Virtualization 0.5 -20% -4% Automotive 0.22 +59% + 45% OEM and rest 0.13 -12% -66% Total 6.7 -19% +3%
Full stocks after crypto collapse
Nvidia justifies the disastrous figures with “macroeconomic headwind” without being specific. “Pricing programs” with sales partners should now lead to the sale of full stock. The high inventories and the associated provisions cost Nvidia around 1.32 billion US dollars, it is said. The discount campaigns should continue to influence Nvidia’s sales in the coming months, admits boss Jensen Huang.
The PC market collapsed by more than 10 percent in the second quarter of 2022, but this mainly affected notebooks and desktop PCs suitable for work. This does not explain the poor performance of the GeForce division. It is therefore appropriate to take a look at mining cryptocurrencies with GPUs.
In the spring and summer of 2022, practically all cryptocurrencies collapsed, making mining with graphics cards, such as Ethereum, much less attractive. Although the computing power in the network remains at a high level, it is no longer increasing – mining farms simply no longer buy significant quantities of graphics cards. This, in turn, has resulted in significantly lower prices for graphics cards, which had previously been well above recommended retail prices for more than two years. The bottom line is that Nvidia’s gross margin collapsed by almost a third.
Parallels to 2018
The situation is all too reminiscent of 2018, when the collapse of the crypto market caught Nvidia (and AMD) cold. At that time, the warehouses were full of GeForce GTX 1060 graphics cards, which led to a drop in sales and the postponement of the GeForce RTX 2060. At the time, the company denied knowing about the many sales to crypto miners. Today, Nvidia is silent on the subject of crypto mining.
Speaking of AMD, the company hid its own Radeon numbers in the gaming division along with processors for the Playstation 5, Xbox Series X/S, and Steam Deck game consoles, which together grew over the same period.
After the preliminary business figures were announced, Nvidia’s shares suddenly fell by 7 percent to around 171 euros. Nvidia will publish the final figures on August 24th.
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