There’s no escaping the difficult macroeconomic environment as was evident in Nvidia’s (NVDA) latest quarterly report. Over the past few years, the chip giant has habitually delivered beat-and-raise results. But although the company came good this time around on the “beat” element, the “raise” factor was missing.
In F1Q23, Nvidia generated revenue of $8.29 billion, amounting to a 46.3% year-over-year increase and coming in above the $8.11 billion anticipated by analysts. Similarly for the bottom-line, Nvidia beat Wall Street’s expectations, dialing in adj. EPS of $1.36 vs. the $1.29 consensus estimate.
As expected, Data Center put in a strong performance, showing a sequential uptick of 15% to reach $3.75 billion, in the process finally overtaking Gaming as Nvidia’s main breadwinner. Additionally, given the ongoing strength amongst its clientele (Hyperscalers and Verticals), end-products (Networking and Compute), and applications – and all given a boost from the anticipated launch of the Hopper GPU in 3Q – the outlook called for more growth for Data Center for the rest of the year.
However, for the current quarter, Nvidia guided for revenue of $8.1 billion, below the Street’s $8.54 billion forecast.
Evercore analyst CJ Muse believes the weak guide was not down to slowing global consumer demand for Gaming but rather mainly on account of the Covid lockdowns in China “weighing” on Gaming demand. However, the outlook for Gaming “remains a bit uncertain,” and investors would have preferred more clarity on the expected trajectory for the segment. Nevertheless, with Chinese lockdowns being phased out, Nvidia remains “upbeat” on the outlook for 2HCY22.
And so is Muse, who thinks shares are now at a point they are just “too cheap to ignore.”
“July Q revenues should mark a bottom with a clear path to sequential growth into both the October and January quarters,” the 5-star analyst said. “We think this is enough to suggest the bottoming process for NVDA shares is coming to an end (now down -54% from 52wk high vs SOX -29%). Add in a…