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NVIDIA's (NVDA) Q4 Earnings to be Hurt by Weak Chip Demand
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NVIDIA Corporation (NVDA - Free Report) is slated to report fourth-quarter fiscal 2023 results on Feb 22.
NVIDIA impressed investors with its stellar financial performance and experienced robust top-and-bottom-line growth in the past several quarters. However, the weakening demand for its chips used in the gaming end market put a break in its growth momentum, as depicted in the last two reported quarters.
In the third quarter of fiscal 2023, though NVIDIA’s revenues of $5.93 billion beat the Zacks Consensus Estimate of $5.81 billion, revenues came 17% lower than the year-ago quarter. The decline was primarily due to continued weakness across its Gaming and Professional Visualization market segments.
Lower data center demand in China also hurt the top line in the reported quarter. Moreover, non-GAAP earnings plunged 50% year over year to 58 cents per share and missed the consensus mark by 17.1%. The trend is likely to have continued in the fourth quarter.
NVIDIA experienced robust sales for its chips used in gaming end markets for the past couple of years. This was driven by pandemic-induced stay-at-home instructions.
The demand for NVIDIA’s gaming chips increased immensely as people were surfing games to stay engaged and entertained indoors during lockdowns. Moreover, with the massive emergence of multiplayer online games and Gaming-as-a-Service concepts, the demand for graphic processing units shot up exponentially.
However, the reopening of economies, along with the rising global slowdown concern amid the ongoing Russia-Ukraine war and the U.S.-China trade war, has been hurting the demand for gaming chips.
NVDA’s revenues from the Gaming market platform plunged 51% year over year and 23% sequentially in the last reported quarter. We believe that the trend is likely to have continued in the fourth quarter. The Zacks Consensus Estimate for the Gaming segment’s revenues is pegged at $1.61 billion, indicating a 52.8% decline from the year-ago quarter’s revenues of $3.42 billion.
Zacks Rank & Stocks to Consider
NVIDIA currently carries a Zacks Rank #4 (Sell). Shares of NVDA have decreased 9.5% over the past year.
The Zacks Consensus Estimate for Clarivate’s fourth-quarter 2023 earnings has remained unchanged at 17 cents per share over the past 60 days. For 2022, earnings estimates have been revised a penny northward to 81 cents per share in the past 60 days.
Clarivate's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 9.4%. Shares of CLVT have fallen 33.1% in the trailing 12 months.
The Zacks Consensus Estimate for RingCentral's first-quarter 2023 earnings has been revised a couple of cents upward to 64 cents per share in the past seven days. For 2023, earnings estimates have been revised to $2.86 from $2.85 seven days ago.
RingCentral’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 9.2%. Shares of RNG have plunged 74.8% over the past year.
The Zacks Consensus Estimate for ServiceNow's first-quarter 2023 earnings has been revised southward by a couple of cents to $2.02 per share over the past 30 days. For 2023, earnings estimates have moved upward by 22 cents to $9.18 per share in the past 30 days.
ServiceNow's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6.9%. Shares of NOW have plunged 21.1% in the trailing 12 months.
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NVIDIA's (NVDA) Q4 Earnings to be Hurt by Weak Chip Demand
NVIDIA Corporation (NVDA - Free Report) is slated to report fourth-quarter fiscal 2023 results on Feb 22.
NVIDIA impressed investors with its stellar financial performance and experienced robust top-and-bottom-line growth in the past several quarters. However, the weakening demand for its chips used in the gaming end market put a break in its growth momentum, as depicted in the last two reported quarters.
In the third quarter of fiscal 2023, though NVIDIA’s revenues of $5.93 billion beat the Zacks Consensus Estimate of $5.81 billion, revenues came 17% lower than the year-ago quarter. The decline was primarily due to continued weakness across its Gaming and Professional Visualization market segments.
Lower data center demand in China also hurt the top line in the reported quarter. Moreover, non-GAAP earnings plunged 50% year over year to 58 cents per share and missed the consensus mark by 17.1%. The trend is likely to have continued in the fourth quarter.
NVIDIA Corporation Price and EPS Surprise
NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote
Weakness in Gaming Chip Demand
NVIDIA experienced robust sales for its chips used in gaming end markets for the past couple of years. This was driven by pandemic-induced stay-at-home instructions.
The demand for NVIDIA’s gaming chips increased immensely as people were surfing games to stay engaged and entertained indoors during lockdowns. Moreover, with the massive emergence of multiplayer online games and Gaming-as-a-Service concepts, the demand for graphic processing units shot up exponentially.
However, the reopening of economies, along with the rising global slowdown concern amid the ongoing Russia-Ukraine war and the U.S.-China trade war, has been hurting the demand for gaming chips.
NVDA’s revenues from the Gaming market platform plunged 51% year over year and 23% sequentially in the last reported quarter. We believe that the trend is likely to have continued in the fourth quarter. The Zacks Consensus Estimate for the Gaming segment’s revenues is pegged at $1.61 billion, indicating a 52.8% decline from the year-ago quarter’s revenues of $3.42 billion.
Zacks Rank & Stocks to Consider
NVIDIA currently carries a Zacks Rank #4 (Sell). Shares of NVDA have decreased 9.5% over the past year.
Some better-ranked stocks from the broader technology sector are Clarivate Plc (CLVT - Free Report) , RingCentral (RNG - Free Report) and ServiceNow (NOW - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Clarivate’s fourth-quarter 2023 earnings has remained unchanged at 17 cents per share over the past 60 days. For 2022, earnings estimates have been revised a penny northward to 81 cents per share in the past 60 days.
Clarivate's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 9.4%. Shares of CLVT have fallen 33.1% in the trailing 12 months.
The Zacks Consensus Estimate for RingCentral's first-quarter 2023 earnings has been revised a couple of cents upward to 64 cents per share in the past seven days. For 2023, earnings estimates have been revised to $2.86 from $2.85 seven days ago.
RingCentral’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 9.2%. Shares of RNG have plunged 74.8% over the past year.
The Zacks Consensus Estimate for ServiceNow's first-quarter 2023 earnings has been revised southward by a couple of cents to $2.02 per share over the past 30 days. For 2023, earnings estimates have moved upward by 22 cents to $9.18 per share in the past 30 days.
ServiceNow's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6.9%. Shares of NOW have plunged 21.1% in the trailing 12 months.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.