Nvidia: Decreased Demand Means GPU Price Cuts
The GPU shortage is now an oversupply situation for Nvidia amid plummeting demand for PC graphics cards.
On Monday, Nvidia released(Opens in a new window) a preliminary earnings report to warn investors about a shortfall in revenue projections. During the May to July fiscal quarter, the company’s gaming-focused revenues reached only $2 billion, dropping 44% sequentially or 33% year over year.
Nvidia’s total revenue for the quarter will only reach $6.7 billion, down from the projected $8.1 billion. The company blames the plunging sales on a “lower sell-in of gaming products reflecting a reduction in channel partner sales likely due to macroeconomic headwinds.” In other words, the ongoing economic downturn is causing retailers to halt orders for GPUs.
“In addition to reducing sell-in, the company implemented pricing programs with channel partners to reflect challenging market conditions that are expected to persist into the third quarter,” Nvidia added.
The falling demand represents a 180-turn from late 2020 and 2021 when the market experienced the worst GPU shortage in history, which led to skyrocketing prices. The situation was caused by huge demand from both consumers and cryptocurrency miners, along with chip manufacturing and supply chain troubles during the COVID-19 pandemic.
But in the months since, demand for GPUs has waned while supplies for the graphics cards has only improved. Nvidia's preliminary earnings report now signals retailers have overstocked GPUs, and are now facing troubles clearing the inventories. The company also noted it'll book a $1.3 billion charge "primarily for inventory and related reserves, based on revised expectations of future demand."
“Our gaming product sell-through projections
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