Nvidia Q2 FY2023 Earnings Report Recap

NVDA missed on earnings and on revenue

Key Takeaways

  • Nvidia's data center revenue came in below analysts' expectations, with growth decelerating from the previous quarter's pace.
  • Demand for services offered by data centers has grown rapidly during the pandemic, boosting demand for Nvidia's chips.
  • Nvidia's data center segment is its biggest platform, with data center revenue eclipsing gaming revenue.
Nvidia Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Earnings Per Share Miss $0.26 $0.50
Revenue Miss $6.7B $7.2B
Data Center Revenue Miss $3.8B $3.9B

Source: Predictions based on analysts' consensus from Visible Alpha

NVIDIA (NVDA) Financial Results: Analysis

Nvidia Corporation (NVDA) reported Q2 FY 2023 earnings on Aug. 24, 2022, that fell short of analysts' expectations. Earnings per share (EPS) came in well below analyst forecasts, falling by 72.3% year over year (YOY). Nvidia's revenue also failed to meet consensus estimates, growing by 3% compared to the year-ago quarter. Data center revenue also did not meet analysts' expectations. Nvidia's latest fiscal year (FY) ended Jan. 30, 2022.

NVDA Data Center Revenue

Nvidia's data center revenue grew 61% YOY, decelerating from the previous quarter's pace. Data center revenue accounted for roughly 56.9% of the company's total revenue for the quarter, as it was well above gaming revenue. Chief executive officer (CEO) and founder Jensen Huang remarked that the company faced a challenging macro environment and difficult supply chain issues, but added that the company "will get through this" difficult period.

Nvidia has traditionally specialized in making chips for the gaming and graphics industry, being a pioneer in the development of graphics processing units (GPUs). It turns out that the robust computational capabilities employed by GPUs to power video games and graphics software are also well-suited for technologies like AI and machine-learning. Both of those technologies are increasingly important for the rapidly growing data center market. Demand for remote computing power increased substantially during the pandemic as more and more people began working from home and businesses were forced to shift certain operations online.

NVDA Outlook and Stock Performance

Nvidia said it expects Q3 FY 2023 revenue to be $5.9 billion, give or take 2%. Gaming revenue is expected to decline sequentially, while data center and automotive revenue is expected to grow over the same timeframe.

Shares of Nvidia stock fell in extended-hours trading following the company's earnings report, dropping by about 4.2% as of this writing. The company's stock has underperformed the broader market in the last year, providing 1-year trailing total returns of -20.9% compared with -7.7% for the S&P 500 as of Aug. 24, 2022.

Nvidia's next earnings report (for Q3 FY 2023) is projected to be released on Nov. 17, 2022.

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