Nvidia Stock: Despite a Decrease in Gaming Revenue of 46%, the Chip Giant Nvidia Managed To Meet Wall Street’s Expectations for Its Earnings

Nvidia Stock

Nvidia Stock (NASDAQ:NVDA)

Despite a decrease in gaming revenue of 46% year-over-year, graphics card giant Nvidia (NASDAQ:NVDA) announced its earnings for the fourth quarter of 2018 on Wednesday after the bell, and they beat the estimates of analysts on both the top and bottom lines.

To make matters even better for Nvidia, the company reports that it anticipates revenue for Q1 of $6.5 billion, which is higher than the estimates provided by Wall Street of $6.35 billion.

Following the release of the report, Nvidia’s stock price increased by more than 6% almost immediately.

According to the compilation done by Bloomberg, the following are the most important numbers from the report in comparison to what Wall Street was expecting from the company.

Revenue came in at $6.05 billion, which was higher than the $6.02 billion forecast.

Earnings per share, adjusted: $0.88, compared to the $0.81 forecasted

The revenue from data centers came in at $3.62 billion, which was lower than the $3.87 billion forecast.

The gaming industry brought in $1.83 billion compared to the expected $1.6 billion.

Compared to the anticipated total of $195 million, professional visualization brought in $226 million.

The automotive and robotics industries brought in $294 million compared to the expected $267 million

The Chief Executive Officer of Nvidia, Jensen Huang, was quoted as saying in a statement that “AI is at an inflection point, setting it up for broad adoption reaching into every industry.” “We are witnessing an increase in interest in the adaptability and capabilities of generative AI across the board, from small startups to large corporations.

Wall Street is of the opinion that Nvidia has a new potential growth opportunity thanks to the recent surge in interest in generative artificial intelligence platforms such as OpenAI’s ChatGPT, Microsoft’s Bing, and Google’s Bard. Platforms for artificial intelligence require a significant amount of processing power, and Nvidia’s graphics cards are an excellent choice for such applications due to their versatility.

The revenue generated by Nvidia’s AI-powered data center business increased to $3.62 billion in the most recent quarter, up significantly from $968 million in the previous quarter.

However, the chip manufacturer, along with the rest of the gaming industry, has also been dealing with a decline in sales in comparison to the same time period last year, when gamers were clamoring for new hardware and software towards the tail end of the pandemic era. The revenue generated by the company’s game business fell by 51% year-over-year during the third quarter.

Gamers were unable to play popular games like “Call of Duty,” “Fortnite,” and “Roblox” as a result of the pandemic, so they searched for graphics cards and computers that ran Nvidia hardware so they could play these games. Nvidia’s gaming revenue is expected to skyrocket as a result of these customers no longer having a requirement to upgrade their hardware.

“Gaming is recovering from the post-pandemic downturn, with gamers enthusiastically embracing the new Ada architecture GPUs with AI neural rendering,” Huang said. “[T]he industry is expected to continue growing in the coming years.”

If you take out the pandemic era, however, and look at the company’s earnings for the fourth quarter in February 2020, you’ll see that the revenue from gaming was $1.5 billion. The year prior to that? Just $954 million. In other words, the gaming industry is reversing the unsustainable growth it experienced during the pandemic in order to get back to where it was before.

Nvidia and ChatGPT

After the craze of ChatGPT spread throughout the market, the price of Nvidia stock increased by 33% compared to the previous month.

In order to train the model, Open AI ChatGPT utilized 10,000 Nvidia GPUs.

Estimates for NVDA’s earnings in the fourth quarter were $0.81 per share, and revenues were projected to be $6.02 billion.

Ahead of Nvidia Corporation’s (NASDAQ:NVDA) quarterly earnings report, the stock price of Nvidia Corporation is trading with mildly bearish cues, and bears are attempting to pull prices lower. However, the general market sentiment is currently shifting into a bearish position, which may have an immediate and direct bearing on the price of NVDA stock for a limited time. During the prior trading session, the NVDA stock price ended the day at $206.55, registering an intraday loss of 3.43%, and reaching a market cap of $514.723 billion.

After the recent craze of Open AI ChatGPT hit the market, the stock price of Nvidia Corporation (NASDAQ:NVDA) has turned bullish and is rising upward by forming fresh higher high swings. This upward movement has caused the stock price to rise.

The price of Nvidia stock found support at $140 at the beginning of January, and after a brief period of consolidation at lower levels, bulls were able to push the price above the 50-day exponential moving average (EMA), which triggered positive sentiment and caused prices to rally by approximately 63% in a short period of time. In the meantime, the stock has also displayed the golden EMA crossover, which indicates that the positional trend has reversed in the direction of bulls and long-term investors are expecting outperformance in the coming months. However, recently NVDA rally took a halt at $230.00 and faced strong rejection from the higher level ahead of its Q4 earnings indicating that bears are trying their best to disturb the market sentiment and reverse the prices in the direction of a downward movement. In addition,

Price action is also showing the initial signs of a short-term correction, which increases the probability that prices might react negatively after the release of Q4 earnings and prices might retest the $188.00 level or will enter into consolidation before deciding the further direction. The technical indicators of the Nvidia stock are turning mildly bearish, and the price action is also showing the initial signs of a short-term correction.

According to the information found on Yahoo Finance, the average earnings forecast for Nvidia Corporation’s fourth quarter was $0.81, and the revenue forecast was $6.02 billion. Long-term investors will have cause for concern if, as predicted by many analysts, NVDA reports poor earnings and experiences a significant slowdown in the growth of its revenue compared to the most recently completed quarter because this will pose a problem for the company.

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