Graphics card giant Nvidia (NVDA) will report its Q4 earnings after the bell on Wednesday, as the chip maker continues to contend with a slowdown in the gaming market following the explosive growth the sector saw during the pandemic years.
Here’s what Wall Street is expecting from the company, as compiled by Bloomberg, compared to how it performed in the same quarter last year.
Revenue: $6.02 billion expected versus $7.64 billion in Q4 last year
Adjusted EPS: $0.81 expected versus $1.32 in Q4 last year
Data center revenue: $3.87 billion expected versus $3.26 billion in Q4 last year
Gaming: $1.6 billion expected versus $3.42 billion in Q4 last year
Professional visualization: $195 million expected versus $643 million in Q4 last year
Auto and robotics: $267 million expected versus $125 million in Q4 last year
Nvidia, like the rest of the gaming industry, has been dealing with a decline in sales relative to the same time last year when gamers were clamoring for new hardware and software towards the tail end of the pandemic era. In Q3, the company’s game business revenue collapsed 51% year-over-year.
The pandemic sent gamers searching for graphics cards and computers running Nvidia hardware so they could play big-name titles like “Call of Duty,” “Fortnite,” and “Roblox.” Now that they have that hardware, they don’t need to upgrade, sending Nvidia’s gaming revenue spiraling.
Take out the pandemic era, though, and look at the company’s Q4 earnings from Feb. 2020 and gaming revenue was at $1.5 billion. The year before? Just $954 million. In other words, the gaming segment is correcting for the unsustainable growth it saw during the pandemic.
But Nvidia has a new potential growth opportunity with the new explosion in interest in generative A.I. platforms like OpenAI’s ChatGPT, Microsoft’s (MSFT) Bing, and Google’s (GOOG, GOOGL) Bard. Artificial intelligence platforms require huge amounts of processing power and Nvidia’s graphics cards are well suited for such applications.
But according to UBS analyst Timothy Arcuri, Nvida’s data center business won’t start to see the impact of additional A.I. spending just yet.
“It is still too early in the Hopper [platform] ramp for Nvidia to wholly escape the cuts in server builds that we have seen over the past few Qs,” Arcuri wrote in a note to investors.
Nvidia’s AI-powered data center business revenue has jumped from $968 million in Q4 2019 to $3.26 billion in Q4 last year. The company has been a pioneer in the AI hardware space, and the business’s revenue has continued to climb in kind.
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Source: https://finance.yahoo.com/news/nvidia-earnings-gaming-revenue-expected-to-plummet-as-data-center-profit-rises-133323812.html