After high demand and short supply in the first two years of the pandemic, Nvidia Corp.’s gaming cards will see a decline in 2022’s three pandemic booms (PC sales, video games, and virtual currency). I was hit.
warned monday morning Expects revenue to be $1.4 billion less than previous forecastlargely due to poor sales of its flagship gaming console, charging excess inventory channels. Concerns over multiple storms have triggered the continued decline.
PC sales are plummeting After a two-year surge, spending on video games and equipment has also picked up. At the same time, falling cryptocurrency prices have made mining less profitable, and Nvidia cards are widely used to mine Ethereum.
and other ciphers.
As a result, demand for game cards declined, just as the market was flooded with waves of used game cards from cryptocurrency miners looking to recoup some of the costs. After years of skyrocketing, Nvidia cards are finally available at prices close to the manufacturer’s suggested retail price, but sellers have been plagued by overstocks as used cards become available. I am struggling to sell because I am connected.
Bernstein analyst Stacey Rasgon said, “Given that gaming GPU data points have been negative for some time as a severe shortage quickly turned into an oversupply and cryptocurrencies crashed, the cutbacks are expected to rise. It’s pretty big, but I don’t think it’s going to be a real big surprise.” It has exceeded its valuation and $210 price target, it wrote in a note on Monday.
If all of this sounds familiar, it’s because something similar happened in 2018. CEO Jensen Huang described it as a “cryptocurrency hangover.” Susquehanna Financial analyst Christopher Rowland sees the “anticipated reset” as “a reminder of the buying opportunities of 2018.”
Still, Rowland lowered his price target from $220 to $210 after the stock fell more than expected.
“Our expectations weren’t high, but the game disappointed more seriously,” said Rowland, adding that he expects the game cards to be even cheaper. head wind. “
The drop was also much bigger than Citi Research analyst Atif Malik had expected, but more like what happened in 2018.
“We expected gaming sales to decline significantly in October-Q, with a 30% peak-to-trough decline in gaming sales versus a 47% correction in 2018-19.” And, Malik said, of $285, which has a purchase rating and a target price. “Gaming is down 44% in his July Q and management expects weakness to continue in his October Q, with macro headwinds impacting pricing at sell-ins and channel partners indicates that the gaming business is declining sharper and faster than expected.”
While many analysts expected a decline in the gaming category, Nvidia also detailed disappointing earnings results and a sharp decline in gross margins for its data center business. Commitments made during chip shortages and inventory write-downs.
CJ Muse, who has topped the ratings and has a price target of $225, said that while the game was expected to languish, the lack of data centers was “clearly a disappointment.”
“Currently, in response to weakening sell-through forecasts, management is working with gaming partners to adjust channel pricing and inventory while slowing Opex growth to manage near-term profitability. said Muse.
Nvidia’s early warning — the company plans to report full second-quarter results on August 24 — may be a lesson from Intel Corp.
Which confused some analysts according to last month’s report unexpectedly bad results without any warning. Additionally, Advanced Micro Devices Inc.
NVIDIA’s stock has fallen 12.6% so far this year, while the S&P 500 Index has
fell 6.6%, the PHLX Semiconductor Index fell at
decreased by 12%.