Nvidia’s preliminary earnings release for FQ2 showed gross margins of 46.1%, showing a decline of 21 PP quarter-over-quarter. My expectation is for Nvidia’s FQ3 revenues to fall in a range of $6.2B to $6.4B - which would mark a sequential decline of up to 7% - and gross margins dropping below 40%. Considering that Nvidia grew its top line at 46% year-over-year in FQ1, a sequential drop-off in growth rates in FQ3 would strongly indicate that the current expansion cycle has ended. In the last 90 days, there were 20 revenue downward revisions. The expectation is for $7.0B in revenues for Nvidia’s third fiscal quarter, implying a (2)% growth rate year-over-year. Shares of Nvidia are now trading at about the same level they were trading at before the FQ2 pre-release… and investors act as if nothing ever happened.ĭata by YCharts FQ3 Guidance Likely Going To Be GloomyĪfter Nvidia’s devastating FQ2 earnings sheet, investors have likely not much to expect from Nvidia’s guidance for FQ3 either. Based off of Nvidia’s preliminary results, the Gaming segment has seen a dramatic 33% year-over-year drop in revenues in FQ2, which caused the Data Center business to pull ahead to the number one spot regarding revenues.ĭespite the unprecedented drop in revenues and gross margins, investors have bid Nvidia’s price up again in the last two weeks. Nvidia’s preliminary results indicated a massive and rapid deterioration of business fundamentals, especially in the graphics card business, which has been affected by negative pricing headwinds and declining PC shipments. Since investors have not taken a “wait-and-see” approach after the release of preliminary results but piled back into the stock, investors might be in for a surprise of the not so positive kind next week! Investors May Be In Denial Given how quickly business fundamentals have eroded in the second fiscal quarter, I believe that Nvidia’s guidance for FQ3 will be very disappointing and likely include a second consecutive decline in gross margins. Nvidia’s earnings release is timed for Augand the company is going to provide much anticipated details about the state of its Gaming business. After Nvidia's ( NASDAQ: NVDA) truly shocking pre-release of FQ2’23 earnings earlier this month, the chipmaker is getting ready to submit its full earnings scorecard next week.
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