Nvidia CEO announces GPU price cuts due to plunging gaming revenue

Nvidia has issued its Q2 FY23 preliminary financial figures, which cover the period ending on July 31, 2022. The primary goal of Nvidia’s preliminary results appears to be to alert investors that the company had a far worse quarter than anticipated.

In essence: Nvidia’s previous revenue forecast for Q2 FY23 was $8.10 billion (guidance from May), however, the company has since lowered that estimate to $6.70 billion. When seen as a whole, that is around 21% off the mark. The main cause of this revenue miss, which is lower than anticipated gaming income, will be of special relevance to our readers, according to Nvidia.

And the significant revenue decline, but that isn’t all. The gross margin or the “profit” Nvidia makes on sales before any deductions, has decreased from 65.1% to 43.7%, as shown in the background data. Additionally, if we assign the majority of the $1.4 billion loss to the game, as is claimed, that would mean that gaming sales fell by about 40%.

In the wake of this gaming bombshell, the revenue by market segment graphic from the preliminary results sheds light on the rebalancing of Nvidia’s books. Despite how much Nvidia talks about robotics, data centres, digital twins, robots, and other topics, gaming has long been the company’s core focus.

You can see from the above graphic that Gaming has fallen well behind Data Center in terms of revenue, which is down 33% year over year and 44% QoQ. Additionally, the Data Center sector is still growing, and the Automotive sector appears to be on the upswing. In conclusion, Nvidia’s diversification (apart from gaming) plan keeps the company afloat.

On Tuesday, August 23, Nvidia plans to announce its complete and final Q2 FY23 results. The management will go over the numbers in more detail at that point, and analysts and investors will have the chance to ask questions on an earnings call.

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