Nvidia shares have been on a rollercoaster ride since the company’s last earnings report, plunging as low as $108 in October before rallying sharply in recent weeks.
The bulls are hoping the GPU giant’s October quarter (fiscal third quarter) report will generate further gains. Among analysts polled by FactSet, the consensus is that Nvidia reports revenue of $5.78 billion (down 19% annually) and non-GAAP EPS of $0.71.
Nvidia typically provides quarterly sales forecasts in its earnings reports. For the January quarter, the company’s revenue consensus is $6.07 billion (down 21%).
Real Money tech columnist Eric Jhonsa will livestream Nvidia’s report, which is expected at 4:20 p.m. ET, along with an earnings call scheduled for 5 p.m.
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5:21 p.m. ET: The Q&A session begins.
5:20 p.m. ET: With Nvidia’s FQ3 Gaming sales hitting $1.57 billion, Kress’ comments suggest FQ4 Gaming’s revenue will be above a pre-profit consensus of $1.48 billion.
5:19 p.m. ET: Regarding FQ4, Kress says Gaming should return to Q/Q growth. The data center should benefit from the rise of Nvidia’s flagship H100 server GPU and suffer from the softness of China.
5:68 p.m. ET: Kress says Nvidia’s $702 million inventory charge in the third quarter was largely related to new Chinese export controls.
5:46 p.m. ET: Automotive revenues would benefit from production ramps for design gains involving Nvidia’s SoC Drive Orin. Kress reiterates that automotive is poised to become Nvidia’s next multi-billion dollar business.
5:14 p.m. ET: Regarding ProViz, Kress suggests that inventory corrections will continue to weigh on sales in the fourth quarter.
5:13 p.m. ET: Kress once again asserts that Nvidia remains confident about the long-term growth of games. Note the popularity of major game launches/events, and that Steam recently hit a new high for concurrent users.
5:11 p.m. ET: As for games (hit by major inventory corrections in recent quarters), Kress says Nvidia believes channel inventories are on track to return to normal levels by the end of the FQ4. Adds that macroeconomic and Chinese lockdowns remain headwinds to near-term demand.
5:08 p.m. ET: Kress says sales of networking products (included in Data Center) have also seen strong growth, driven in part by demand from hyperscalers.
5:07 p.m. ET: Kress points to Nvidia’s morning announcement about teaming up with Microsoft to build a giant AI supercomputer on Azure, and that the solution will leverage Nvidia’s entire AI software stack.
5:05 p.m. ET: Kress speaks. It begins by summarizing Nvidia’s FQ3 performance. The growth of Notes data centers has been driven by major cloud providers in the United States and a growing set of consumer Internet companies.
She adds that data center sales to “vertical industries” (traditional businesses) have also been good and Chinese demand remains weak overall.
5:02 p.m. ET: Head of IR Simona Jankowski reviews Nvidia’s security statement. Typically, Nvidia’s calls featured prepared remarks by Chief Financial Officer Colette Kress, after which both Kress and CEO Jensen Huang answered questions from analysts.
5:01 p.m. ET: The call begins.
4:58 p.m. ET: Nvidia ended the third quarter with $13.1 billion in cash/equivalents and $10.9 billion. The cash balance decreased by $3.89 BQ/Q, largely due to redemptions.
4:56 p.m. ET: Nvidia’s earnings call should start in a few minutes. I will cover it.
4:54 p.m. ET: Notably, Nvidia says the sales of Chinese server GPUs it lost in the third quarter due to new export controls were “largely offset by sales of alternative products in China.” It will be interesting to hear what is said on the call about the expected demand for these products in the future.
4:51 p.m. ET: Nvidia on the potential impact of Ethereum’s move to proof-of-stake on gaming GPU demand:
“We believe that the recent transition of verification of Ethereum cryptocurrency transactions from proof-of-work to proof-of-stake has reduced the usefulness of GPUs for cryptocurrency mining. This may have contributed to the increased aftermarket sales of our GPUs in some markets, potentially impacting demand for some of our products, particularly at the lower end.”
4:48 p.m. ET: Like some other tech companies, Nvidia is slowing spending. The company’s non-GAAP operating expenses totaled $1.79 billion in the third quarter, up 30% year-over-year, but only 3% quarter-on-quarter and slightly below the 1 $.82 billion.
For FQ4, Nvidia expects non-GAAP opex to decline slightly Q/Q to $1.78 billion. GAAP opex, which includes stock composition among other things, is expected to be $2.56 billion from $2.58 billion in the third quarter.
4:44 p.m. ET: Despite recent writedowns, Nvidia ended the third quarter with $4.45 billion in inventory, down from $3.89 billion at the end of the second quarter and $2.23 billion a year earlier. Likely in-game: significant purchase commitments made from TSMC and pending production ramps for new gaming and server GPUs.
Prepaid supply deals (TSMC looms large here) were flat Q/Q at $3.14 billion. Nvidia also says it had $2.75 billion in “non-inventory purchase obligations,” of which $1.59 billion involved multi-year agreements with cloud service providers.
4:40 p.m. ET: Due to OEM inventory fixes, ProViz revenue (driven by workstation GPU sales) fell 60% Q/Q and 65% Y/Y to $200 million, below a consensus of $363 million.
Automotive revenue (benefiting from Nvidia’s Drive ADAS/self-driving platform production ramps) grew 14% Q/Q and 86% Y/Y to $251 million, topping a consensus of $229 million.
OEM and other revenue (these include sales of Jetson edge computing offerings and non-gaming GPUs, and are also impacted by inventory corrections) fell 48% Q/Q and 69% Y/ Y at $73m, below a consensus of $128m.
4:36 p.m. ET: Nvidia is now up 1.3% AH at $161.20. Rivals AMD and Intel are up 0.6%.
4:34 p.m. ET: The reason EPS missed estimates despite overshooting revenue and buybacks: Nvidia’s non-GAAP gross margin was 56.1%, down from 45.9% in the second quarter, but down from 67% a year ago and below the forecast of 65% (plus or minus 50 basis points).
In its CFO commentary, Nvidia notes that its chief financial officer was hit by a $702 million inventory charge (this follows charges of $1.32 billion in the second quarter). The company expects its GM to rebound 66% (plus or minus 50 basis points) in the fourth quarter.
4:27 p.m. ET: Notably, Nvidia spent $3.65 billion on stock buybacks in the third quarter. This follows $3.34 billion in redemptions in the second quarter.
4:26 p.m. ET: Gaming revenue fell 23% Q/Q and 51% Y/Y to $1.57 billion. But it topped a consensus of $1.42 billion.
4:24 p.m. ET: Likely welcomed by investors: Despite new Chinese restrictions, Nvidia’s data center revenue was $3.83 billion, up 1% QoQ and 31% YoY, and at above a consensus of $3.72 billion.
4:22 p.m. ET: Nvidia forecast FQ4 revenue of $6 billion, plus or minus 2%. That’s below a consensus of $6.07 billion.
Shares are up 3.2% after hours.
4:21 p.m. ET: The results are out. Third-quarter revenue of $5.93 billion beat consensus of $5.78 billion. Non-GAAP EPS of $0.58 misses consensus of $0.71.
4:10 p.m. ET: FQ3 consensus estimates for Nvidia’s product segments:
Data Center – $3.72 billion (+27% YoY)
Games – $1.42 billion (-56%)
Professional visualization – $363M (-37%)
Automotive – $229 million (+70%)
OEM & IP – $128m (-45%)
With near-term expectations for gaming and ProViz very low (both segments also expected to experience a sharp Y/Y sales decline in Q4), data center performance (affected by China, but benefiting from strong spending investment in the cloud in the United States) is very much in the spotlight. at present.
4:03 p.m. ET: Stocks are posting profits down 46% since the start of the year. However, despite today’s decline, they are up 47% from the October low of $108.13.
4:01 p.m. ET: Amid a broader tech sector and a rout in chip stocks, Nvidia closed down 4.5% today at $159.10. The FQ3 report is expected to arrive at 4:20 a.m. ET.
3:57 p.m. ET: Worth noting: Nvidia previously warned that new export restrictions on server GPU sales to China could impact its FQ3 sales by up to $400 million. Between that and continued pressure from the gaming GPU, informal expectations for Nvidia’s results and advice could be lower than consensus estimates.
3:54 p.m. ET: The FactSet consensus is that Nvidia reports FQ3 revenue of $5.78 billion and non-GAAP EPS of $0.71.
For FQ4 (quarterly sales forecast to be provided in the report), revenue consensus is $6.07 billion.
3:51 p.m. ET: Hi, this is Eric Jhonsa. I will be blogging live on Nvidia’s earnings report and call.