iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
19,351 Blog Posts

Did $NVDA Shit the Bed?

Big earnings out after the close from overvalued poster child, NVDA. This is a company who has enjoyed extreme valuations expansion, due to their exposure to gaming, AI, and of course SHITCOINS. Remember when people were mining or BTC in their basements? Yeah, that shit was powered by NVDA.

The company went from 3x sales to 10x, based upon the idea that they could grow forever. Based upon the events which unfolded tonight, nothing could be further from the truth.

NVIDIA prelim Q1 $0.88 vs $0.81 S&P Capital IQ Consensus Estimate; revs $2.22 bln vs $2.20 bln S&P Capital IQ Consensus Estimate

Sales fell by a staggering 30% YOY.

NVIDIA beats by $0.07, beats on revs; guides Q2 revs in-line (160.19 +0.61)

Reports Q1 (Apr) earnings of $0.88 per share, $0.07 better than the S&P Capital IQ Consensus of $0.81; revenues fell 30.8% year/year to $2.22 bln vs the $2.2 bln S&P Capital IQ Consensus.

Gaming rev -39% to $1.06 bln; data center rev -10% to $634 mln.

Co issues in-line guidance for Q2, sees Q2 revs of $2.5-2.6 bln vs. $2.53 bln S&P Capital IQ Consensus; non-GAAP gross margin 59.2-59.5%.

“NVIDIA is back on an upward trajectory,” said Jensen Huang, founder and CEO of NVIDIA. “We’ve returned to growth in gaming, with nearly 100 new GeForce Max-Q laptops shipping. And NVIDIA RTX has gained broad industry support, making ray tracing the standard for next-generation gaming… Despite the near-term pause in demand from hyperscale customers, the application of AI continues to accelerate. AI adoption is accelerating in the world’s largest industries, moving beyond the cloud to the edge where AI processing has to be instantaneous. We’re excited about our pending acquisition of Mellanox, which will help us drive data center architecture for high performance computing and AI from the cloud to the edge,” he said.

NVDA is at the forefront of supplying the auto market with AI chips for automated driving. There’s a lot of great things to like about NVDA — which is why it’s expensive. But let’s get real here, sales dropped 24.2% YOY last quarter and this quarter it fell 30%.

Sales came in at $2.22b, flat from last quarter. On the bright side, the company is expecting 15% QOQ growth, which is positive and great — but they’re only giving guidance one quarter at a time due to lack of visibility.

Q2 of 2018 was peak revenues for the company, so expect sales to come in around -22% YOY.

Back in August of 2017, sales came in at $2.2b and then in the November quarter they grew to $2.6b. But net income for the quarter was only $394 million, which is more than 30% less than the August 2017 quarter. The implications of this is bad product mix and margins, either due to pricing weakness, increased competition, or a combination of their CAC skyrocketing due to promotions or increased labor costs. Either way, the company is far less efficient than before and I’d be surprised if the stock rallied on this milquetoast quarter.

If, in fact, they do $2.6b next quarter and then guide back up to $2.9b for the next quarter, then the company can advertise as being back on track. Until then, these fuckers are still trying to recover from the massive punch in the face they’ve taken and buyers of the stock should know there is a weakness here that is not being properly communicated to the public.

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5 comments

  1. moosh

    Nice write up Fly. The edge sounds like a great place to be moving from the cloud

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  2. it is showtime

    “not being properly communicated to the public.”
    l? o? l?

    oh like the fantasy vs reality endemic to most of the fumes running this endstage

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  3. awanka

    I think their period of extreme growth was an outlier buoyed by the crypto craze, and being the clear leader for high-end gaming graphics cards. Neither of which is totally true anymore. They were the prettiest girl at the ball, and everyone wanted to dance with them.

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  4. boyaj

    The answer to your headline is yes.

    “Properly communicated” is nice way of saying lying; how can gaming revenue drop 39% YOY, but you’re able to see growth in that segment.

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  5. 'merica

    Nvidia will soon have another competitor with Intel seriously investing in the graphics chip space.

    Granted, Intel could very well produce a basket of shit products, but it’s another competitor nonetheless.

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