Nvidia Profit Misses Estimates Amid China Slowdown

Ethereum also weighed on results, though chip maker offered positive outlook

Nvidia office building

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Key Takeaways

  • Nvidia missed earnings estimates but topped revenue expectations late on Nov. 16.
  • Nvidia shares edged higher in after-hours trading after the chip maker offered an upbeat margin outlook.
  • Slowing economic growth in China weighed on Nvidia's results, as did Etherum's shift away from crypto mining.
  • Nvidia said it's made rapid progress in reducing excess inventories.
Nvidia Earnings Results
Metric  Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted Earnings Per Share ($) Miss 0.58 0.71
Revenue ($B) Beat 5.9 5.8
Data-Center Revenue ($B) Match 3.8 3.8

Source: Predictions based on analysts' consensus from Visible Alpha and news reports,

Nvidia Financial Results: Analysis

Nvidia Corp. (NVDA) posted quarterly earnings below market expectations late on Nov. 16, as China's economic slowdown weighed on demand for its data-center chips and the graphics processing units (GPUs) used in gaming. The computing chips developer posted adjusted earnings of 58 cents per share for the quarter ended Oct. 30, versus analysts' consensus estimate of 71 cents per share. The latest EPS result was 50% below the same quarter in the previous fiscal year.

Revenue fell 17% year-over-year amid a deep slump in demand for GPUs, exacerbated by the shift of the Ethereum cryptocurrency away from the proof-of-work blockchain verification method that encouraged use of GPUs for crypto "mining."

“We are quickly adapting to the macro environment, correcting inventory levels and paving the way for new products,” said Nvidia CEO Jensen Huang in the earnings release.

Nvidia's data-center sales, which have offset softness in gaming over the past year, met expectations, growing 31% year-over-year and 1% from the quarter ended in July. U.S. customers, including cloud computing providers and consumer internet sites, paced the year-over-year gains, while slowing Chinese demand has weighed on growth in the key segment since the summer, according to CFO Colette Kress.

Nvidia's Outlook

Nvidia projected revenue of $6 billion for the January-ending quarter, broadly in line with analyst estimates. The chip supplier expects its adjusted gross margin to rebound from 56% in the most recent quarter to 66% in the current period.

The margin outlook implied upside versus consensus earnings expectations. Nvidia's share price rose 1.8% in after-hours trading.

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  1. Nvidia Corp. "Nvidia Announces Financial Results for Third Quarter Fiscal 2023."

  2. Nvidia Corp. "Q3FY23 CFO Commentary," Page 2.

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