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Weak Gaming Chip Demand to Hurt NVIDIA's (NVDA) Q1 Earnings
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NVIDIA Corporation (NVDA - Free Report) is slated to report first-quarter fiscal 2024 results on May 24.
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 three reported quarters.
In the fourth quarter of fiscal 2023, though NVIDIA’s revenues of $6.05 billion beat the Zacks Consensus Estimate of $6.01 billion, revenues came 21% 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 33% year over year to 88 cents per share. The trend is likely to have continued in the first quarter of fiscal 2024.
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 46% year over year in the last reported quarter. The year-over-year decline was primarily due to a lower sell-in of Gaming products. This reflected a reduction in channel partner inventory levels amid weak demand due to macroeconomic headwinds and pandemic-related issues in China, which weighed on consumer demand.
We believe that the trend is likely to have continued in the first quarter. The Zacks Consensus Estimate for the Gaming segment’s revenues is pegged at $1.95 billion, indicating a 46% decline from the year-ago quarter’s revenues of $3.62 billion.
Zacks Rank & Stocks to Consider
NVIDIA currently carries a Zacks Rank #3 (Hold). Shares of NVDA have soared 116.8% year to date (YTD).
The Zacks Consensus Estimate for Meta's second-quarter 2023 earnings has been revised 43 cents northward to $2.87 per share in the past 30 days. For 2023, earnings estimates have been revised 15.2% upward to $12.04 per share in the past 30 days.
Meta’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 15.5%. Shares of META have surged 104.9% YTD.
The Zacks Consensus Estimate for Manhattan Associates' second-quarter 2023 earnings has been revised upward by a couple of cents to 72 cents per share for the past 30 days. For 2023, earnings estimates have moved upward by 17 cents to $2.87 per share in the past 30 days.
Manhattan Associates' earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 33.6%. Shares of MANH have soared 45.1% YTD.
The Zacks Consensus Estimate for Wix.com’s second-quarter 2023 earnings has remained unchanged at 36 cents per share over the past 60 days. For 2023, earnings estimates have been unchanged at $1.49 per share in the past 60 days.
Wix.com's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 302%. Shares of WIX have increased 5% YTD.
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Weak Gaming Chip Demand to Hurt NVIDIA's (NVDA) Q1 Earnings
NVIDIA Corporation (NVDA - Free Report) is slated to report first-quarter fiscal 2024 results on May 24.
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 three reported quarters.
In the fourth quarter of fiscal 2023, though NVIDIA’s revenues of $6.05 billion beat the Zacks Consensus Estimate of $6.01 billion, revenues came 21% 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 33% year over year to 88 cents per share. The trend is likely to have continued in the first quarter of fiscal 2024.
NVIDIA Corporation Price and EPS Surprise
NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote
Softness 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 46% year over year in the last reported quarter. The year-over-year decline was primarily due to a lower sell-in of Gaming products. This reflected a reduction in channel partner inventory levels amid weak demand due to macroeconomic headwinds and pandemic-related issues in China, which weighed on consumer demand.
We believe that the trend is likely to have continued in the first quarter. The Zacks Consensus Estimate for the Gaming segment’s revenues is pegged at $1.95 billion, indicating a 46% decline from the year-ago quarter’s revenues of $3.62 billion.
Zacks Rank & Stocks to Consider
NVIDIA currently carries a Zacks Rank #3 (Hold). Shares of NVDA have soared 116.8% year to date (YTD).
Some better-ranked stocks from the broader technology sector are Meta Platforms (META - Free Report) , Manhattan Associates (MANH - Free Report) and Wix.com (WIX - Free Report) . While Meta and Manhattan Associates each sport a Zacks Rank #1 (Strong Buy), Wix.com carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Meta's second-quarter 2023 earnings has been revised 43 cents northward to $2.87 per share in the past 30 days. For 2023, earnings estimates have been revised 15.2% upward to $12.04 per share in the past 30 days.
Meta’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 15.5%. Shares of META have surged 104.9% YTD.
The Zacks Consensus Estimate for Manhattan Associates' second-quarter 2023 earnings has been revised upward by a couple of cents to 72 cents per share for the past 30 days. For 2023, earnings estimates have moved upward by 17 cents to $2.87 per share in the past 30 days.
Manhattan Associates' earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 33.6%. Shares of MANH have soared 45.1% YTD.
The Zacks Consensus Estimate for Wix.com’s second-quarter 2023 earnings has remained unchanged at 36 cents per share over the past 60 days. For 2023, earnings estimates have been unchanged at $1.49 per share in the past 60 days.
Wix.com's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 302%. Shares of WIX have increased 5% YTD.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.