Nvidia reported earnings for the second fiscal quarter ended July 31 amid a slowdown in PC and gaming sales. The financial results for revenues met diminished expectations, which were set after Nvidia warned that its quarterly results would be weaker than expected.
The company’s business in game graphics and artificial intelligence (AI) chips saw huge growth in 2020 and 2021 during the pandemic, but now things are slowing down in gaming. In after-hours trading, Nvidia’s stock is down 3% to $167.58 a share.
Revenues came in at $6.7 billion, up 3% from a year ago and down 19% from the previous quarter. Analysts expected revenue of $6.7 billion versus $6.5 billion last year. Earnings per share came in at 26 cents on a GAAP basis, compared to expectations of 35 cents a share.
For the data center, analysts expected $3.8 billion versus $24 billion last year. And for gaming they expected $2.0 billion versus $3.1 billion last year.
Nvidia released its preliminary earnings on August 8, when it warned investors that the company was going to miss on its own expectations for the quarter as gaming sales weakened. Nvidia saw softness due to the war in Ukraine and a slowdown in China, with macroeconomic slowdowns around the world affecting consumer demand in a negative way. The company said it is unable to determine what impact slipping demand for crypto mining had on the lower revenues.
GAAP earnings per diluted share for the quarter were 26 cents down 72% from a year ago and down 59% from the previous quarter. Non-GAAP earnings per diluted share were 51 cents, down 51% from a year ago and down 63% from the previous quarter.
“We are navigating our supply chain transitions in a challenging macro environment and we will get through this,” said Jensen Huang, founder and CEO of Nvidia, in a statement. “Accelerated computing and AI, the pioneering work of our company, are transforming industries. Automotive is becoming a tech industry and is on track to be our next billion-dollar business. Advances in AI are driving our data center business while accelerating breakthroughs in fields from drug discovery to climate science to robotics.”
He added, “I look forward to next month’s GTC conference, where we will share new advances in RTX, as well as breakthroughs in AI and the metaverse, the next evolution of the internet. Join us.”
During the second quarter of fiscal 2023, Nvidia returned to shareholders $3.44 billion in share repurchases and cash dividends, following a return of $2.10 billion in the first quarter. The company has $11.93 billion remaining under its share repurchase authorization through December 2023. Nvidia plans to continue share repurchases this fiscal year.
Nvidia said it expects revenue for the third fiscal quarter, which ends on October 31, to be $5.9 billion. Gaming and professional visualization revenue are expected to decline sequentially, as computer makers and channel partners reduce inventory levels to meet current levels of demand and to prepare for Nvidia’s next generation of chips. The company expects that decline to be partially offset by sequential growth in data center and automotive.
GAAP and non-GAAP gross margins are expected to be 62.4% and 65.0%, respectively, plus or minus 50 basis points.
Data center revenue
Second-quarter revenue was $3.81 billion, up 61% from a year ago and up 1% from the previous quarter.
Nvidia said Grace superchips are being used to create HGX systems by some of the world’s leading computer makers — including Atos, Dell Technologies, Gigabyte, HPE, Inspur, Lenovo and Supermicro.
Gaming and visualization
Second-quarter revenue was $2.04 billion, down 33% from a year ago and down 44% from the previous quarter. Professional visualization second-quarter revenue was $496 million, down 4% from a year ago and down 20% from the previous quarter.
Announced a major release of Omniverse with new frameworks, tools, apps and plugins, including 11 new connectors to the Omniverse USD ecosystem that bring the total to 112. It also cofounded the Metaverse Standards Forum to align with other members on the best ways to build the foundations of the metaverse.
Automotive
Second-quarter revenue was $220 million, up 45% from a year ago and up 59% from the previous quarter.