Nvidia Corp has forecast a sharp drop in revenue for its current quarter on the back of a weaker gaming industry as it reported below-forecast second-quarter results after the New York close on Wednesday.
The graphics chip design company said it expected third-quarter revenue of $5.90 billion, down 17% year-on-year, but noted that the declines would be partially offset by growth in its data center and automotive business.
The company's second-quarter revenue of $6.70 billion was significantly lower than the $8.10 billion Nvidia forecast in May. Its gaming division posted revenue of $2.04 billion, down 33% year on year, while data center revenue held up at $3.81 billion, up 61% year on year.
The gaming industry has been showing signs of weakness recently as consumers pull back from discretionary purchases such as video-gaming gear amid decades-high inflation. Nvidia graphics chips (GPUs) have also been used for cryptocurrency mining and sales which has taken a hit as the crypto market has crumbled.
Nvidia said it took a $1.34 billion charge in the second quarter as it wrote down inventory built up when it thought the gaming and data center markets would be much stronger.
Reuters reported that Nvidia chief executive Jensen Huang said on an earnings call that Chinese cloud service providers' infrastructure investment had slowed a lot in the second quarter, but this had been offset by strong growth in the United States.
Huang also told analysts on the call that the company also faced supply chain challenges that prevented it from selling more systems to data centers, Reuters added.
In early New York trading on Thursday, Nvidia shares edged up 0.6% to $172.78, having fallen by about 4.5% in after-hours trading on Wednesday.
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