Shares of A.I. chip giant NVIDIA (NVDA - Free Report) have fallen in a 16.5% crater in late trading today following the company's Q3 earnings report that missed expectations on both top and bottom lines, as well as disappointing guidance looking ahead. Earnings of $1.84 per share missed the Zacks consensus by 3.66% while revenues underperformed by 1.79% in the quarter to $3.18 billion. Shares are now trading at 52-week lows.
After two years of stellar growth in its Gaming and Data Center segments, we're seeing a leveling off for NVIDIA, and expectations have suddenly come down dramatically. The company itself cites "excess channel inventory" related to the "post-crypto currency boom, which will be corrected." Thus, revenue guidance for its fiscal Q4 in January has been ratcheted way down to $2.7 billion from the $3.4 billion analysts had been expecting.
No doubt analysts will be busy re-working their models, with lower price targets and estimates going forward. NVIDIA, which had been a Zacks Rank #3 (Hold)-rated company ahead of the earnings release, will likely be taken down a peg or two in the near-term. Not only that, but investors who have remained tech-heavy may see these NVIDIA results lead the sector down in Friday's pre-market activity as well.
NVIDIA still possesses a state-of-the-art platform with its Turing products, which will keep the company viable over the longer term, but hits to its high-growth segments -- and now with companies like AMD (AMD - Free Report) announcing they intend to challenge NVIDIA's preeminence in the Data Center space -- are taking this recently high-flying Tech favorite down. For more on NVDA's earnings, click here.
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