NVDA Stock Stumbles as Nvidia Earnings Disappoint

  • Nvidia (NASDAQ:NVDA) stock was down more than 4% in pre-market trading
  • The company’s Q1 results beat expectations, but its Q2 revenue guidance was lower than expected
  • It expects its revenue from gaming chips to fall significantly during the current quarter
An Nvidia (NVDA) semiconductor chip on a black background.
Source: Hairem / Shutterstock.com

Nvidia (NASDAQ:NVDA) stock fell in pre-market trading after the company reported stronger-than-expected first-quarter results but provided Q2 revenue guidance below estimates. The chip maker noted that the war in Ukraine and the lockdowns in China would meaningfully lower its Q2 revenue.

Nvidia reported adjusted Q1 earnings per share of $1.36, versus analysts’ average estimate of $1.29. Its top line jumped 46% year over year to $8.28 billion, compared with the mean outlook of $8.08 billion.

For Q2, however, the chip maker predicted that its top line would be $8.1 billion, “plus or minus 2%.” Analysts, on average, had expected Nvidia’s Q2 sales to be $8.44 billion. Nvidia estimated that the war in Ukraine and the Covid-19 lockdowns in China would lower its revenue by about $500 million. In other words, it appears that, if not for those two negative catalysts, the chip maker’s Q2 revenue would have exceeded analysts’ average estimate.

Weakening Game Demand Weighs on NVDA Stock

The company reported that the demand for its graphics processors remains strong, while the sales of its data center chips had soared 83% YOY last quarter. Revenue from its gaming chips, however, grew by a much lower 31% YOY. The company anticipates that its revenue from them would fall by 13%-19% in Q2, compared with Q1.

Nevertheless, Nvidia CEO Jensen Huang said that “the underlying dynamics of the gaming industry is really solid.”

Nvidia also had negative news for the cryptocurrency sector. The company reported that, primarily as a result of a decline in the sales of its products used in crypto mining, the company’s “other revenue” category had tumbled 52% YOY.

Before today, NVDA stock had tumbled 42% so far this year.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.


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