Challenge Accepted

Image source: Vincentiu Solomon – Unsplash

What's going on?

Nvidia reported its best quarterly revenue ever earlier this week, but the future doesn’t exactly look straightforward for the US chipmaker.

What does this mean?

Nvidia’s gaming business boosted its revenue by 31% last quarter from the same time last year, with its graphics chips making their way into everything from laptops to Nintendo Switches. The company’s data center business one-upped even that, growing its revenue by 83% as more firms switched to the cloud and AI solutions. So even a drop in its automotive and crypto mining chips – caused by cuts in car production and the drop in the crypto market – couldn’t drag on results too much: overall sales still grew by a better-than-expected 46% to a new quarterly record.

But that streak looks like it’s at an end: Nvidia said it’ll need to limit costs in a “challenging economic environment”, and gave a disappointing revenue outlook for this quarter too. So investors didn’t much care about last quarter’s successes: they sent its stock down 10% after the announcement.

Why should I care?

For markets: Is Nvidia going cheap?
It wasn’t long ago that Nvidia was being touted as the next $1 trillion company, but the tech stock collapse has made that prospect a thing of the past (tweet this). Its stock has since tumbled 50% from its all-time high in November, meaning its market value is now closer to the $400 billion mark. In fact, it’s now so far from its peak that analysts reckon it could be good value: they’re expecting the stock to return an average of 87% over the next 12 months.

The bigger picture: The old-new normal.
Intel reiterated this week that it’s expecting the chip shortage to continue well into 2024, but Nvidia’s seeing signs that this cold war is starting to thaw: the company said that inventory of its gaming graphics chips – which have been particularly difficult to get hold of over the past year – had “normalized”.

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Assault And Battery

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.