Nvidia’s revenue plunges against a backdrop of collapsing gaming demand, crypto mining, and destocking pending the next generation of GPUs.
Nvidia’s latest financial results may not please all investors. The firm announces indeed a collapse of its turnover – a drop which seems to spare practically no sales division. The announcement is not a surprise: preliminary results had already plunged the action of the firm. Overall, the decline in turnover is 19%, with however a slight growth of 3% over the year.
It must be said that many of the company’s locomotives are at a standstill. Gaming revenue, in particular, is the one that has plunged the most. Nvidia announces a sequential decline in revenue of 44% (compared to the previous quarter) and 33% year-over-year. The Datacenter division saves the furniture a little with a turnover of 3.1 billion dollars and an annual growth of 61%. But this figure hides a slowdown in orders in the sector.
Nvidia revenue is dragged down by crypto, and excess RTX 3000 card inventory
In addition, Nvidia admits that the turmoil in the crypto market is impacting the results seen in the quarter. The company’s GPUs remain popular with miners. But with the onset of crypto winter, many miners left the market. Mechanically reducing the demand for gaming GPUs. Nvidia adds that it does not know exactly what proportion of the drop in turnover is attributable to this context.
While pointing out that fluctuations in crypto have already impacted demand for Nvidia GPUs in the past. But there is another problem: since their launch, RTX 3xxx GPUs have been in chronic shortage, which has forced Nvidia to increase production. However, at this stage, resellers have an inventory of RTX 3000 cards that are too high. This means fewer orders from Nvidia, and also destocking at a lower price – to prepare for the arrival of the firm’s next generation of GPUs.
Nvidia CEO Jensen Huang nevertheless wants to believe that Nvidia’s positioning in the acceleration of computing and artificial intelligence will eventually drive the firm’s revenues up again:
“We are navigating our supply chain transitions in a challenging macroeconomic environment, and we will go all the way. Computing acceleration and artificial intelligence, topics in which our company is a pioneer, are transforming industries. Automotive is becoming a tech industry and this sector is well on its way to becoming our next billion+ division. Advances in AI are driving results from our Data Center division while accelerating discoveries in areas like drug discovery, climate science, or robotics,” explains the CEO of Nvidia.
Jensen Huang adds that he will be talking more about “upcoming RTX, AI and metaverse advancements” on the sidelines of the Nvidia GTC conference being held September 19-22, 2022.