Nvidia Plummets Following Lower-Than-Expected Q4 Sales Guidance (NASDAQ:NVDA)

Irving Hamilton
November 18, 2018

On Thursday, Nvidia said it was experiencing some excess inventory in mid-range graphics cards, blaming the problem on the "post-crypto hangover", which temporarily inflated prices for the company's GPUs.

This is Nvidia's first EPS miss in 13 quarters. Evercore ISI raised their price objective on shares of NVIDIA from $300.00 to $400.00 and gave the stock an outperform rating in a report on Friday, September 28th.

"While we view the inventory correction in Gaming as a one-time reset as opposed to a change in the long-term growth profile, we believe it could take a few quarters before the market regains confidence in the growth trajectory of the business, especially given the weak economic backdrop". Brown Advisory Inc. now owns 7,473 shares of the computer hardware maker's stock valued at $1,730,000 after acquiring an additional 4,513 shares during the last quarter. (NASDAQ:NVDA) by 22.0% during the second quarter, according to the company in its most recent disclosure with the Securities & Exchange Commission. The company provided earnings per share guidance of ~$1.32-1.49 for the period, compared to the Thomson Reuters consensus earnings per share estimate of $2.01. Income without costs and taxes is $3,18 billion - 2% more than in Q2.

Shares in Nvidia were set to open at their lowest in a year, falling 18 percent in trading before the opening bell. AMD's shares sank 7 per cent after Nvidia posted results after the market closed Thursday. The situation isn't any better at Nvidia, its main competitor. Nvidia is saying there was a lot of Pascal inventory, likely due to over-ordering during the crypto-boom where gaming customers were ordering 2-3X of what they needed to assure supply.

Datacenter segment revenue, the second-largest, jumped 58 percent, to $792 million, also a bit below the $821 million consensus.

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The GPU segment comprises of product brands which aims specialized markets including GeForce for gamers; Quadro for designers; Tesla and DGX for AI data scientists and big data researchers; and GRID for cloud-based visual computing users.

COPYRIGHT VIOLATION WARNING: This news story was originally published by Marea Informative and is owned by of Marea Informative. Nvidia made a point of noting that the chips have seen "record adoption" for a server GPU and said T4 sales contributed to revenues in the last quarter.

Huang continued to emphasize Nvidia's AI opportunity. "We expect to continue to do well in data centers".

At the same time, Nvidia faces increasing competition in AI - both from other chipmakers, such as Advanced Micro Devices Inc., Intel Corp. and Xilinx Inc., and other kinds of chips, such as custom chips called field-programmable gate arrays and application-specific integrated circuits. Finally, revenue from sales to original equipment manufacturers and from intellectual property fell 23 percent, to $148 million, partly because of the cryptomining issue, but that beat the Street's $102 million forecast.

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