Nvidia Hints at Revenue Drop in Q2 2022 Amid Weak Gaming Business
Nvidia on Monday warned its second-quarter revenue would drop by 19 percent from the prior quarter on weakness in its gaming business, sending the chip designer's shares down about 8 percent.
The company reported preliminary results for the second-quarter, just days after chipmaker Intel, Qualcomm, and Sony forecast weak sales on demand concerns for personal computers and phones.
The gaming industry, largely considered to be recession proof, is beginning weaken as consumers weigh purchases of discretionary items such as video-game consoles.
Last month, Xbox-maker Microsoft reported a slump in gaming revenue while PlayStation-maker Sony trimmed its forecast.
Chipmakers have also been struggling with worsening supply-chain snarls ahead of the key holiday period due to the Russia-Ukraine conflict and COVID-19 curbs in China's manufacturing hubs in recent months.
Nvidia said its gaming unit's preliminary revenue, which includes sales of high-end graphic cards for desktops and laptops, declined 44 percent from the previous quarter to $2.04 billion (roughly Rs. 16,240 crore).
Piper Sandler analyst Harsh Kumar said the magnitude of the decline was surprising, not the warning on gaming revenue.
"Nvidia's gaming slowdown likely includes the chips they sell to the crypto market which has been weak hence the extent of the slowdown is so significant," JP Morgan analyst Sandeep Deshpande said in a note.
Nvidia increased the supply of cryptocurrency mining processors, which brought in $266 million (roughly Rs. 2,120 crore) in the second quarter last year.
The company expects to report overall second-quarter revenue of about $6.70 billion (roughy Rs. 53,350 crore) on August 24.
Analysts had estimated revenue of $8.1 billion (roughly
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