Nvidia, the Delaware incorporated developer of high-end GPUs, has released its financial outlook report for Q4 2019.
Revising Estimates For Fourth Quarter 2019
In a press release published on January 28th, Nvidia’s management revealed that the company is expecting $2.2 billion in fourth quarter revenue this year, which is down significantly from the previous estimate of $2.7 billion. The projected financial figures are based on Nvidia’s revenue generated from its two main areas of focus, which include datacenters and the gaming industry.
As mentioned in Nvidia’s financial report, the California-based tech firm’s management will be discussing the reported financial results next month. According to Nividia’s analysis of the current GPU market:
In Gaming, Nvidia’s previous fourth-quarter guidance had embedded a sequential decline due to excess mid-range channel inventory following the cryptocurrency boom. The reduction in that inventory and its impact on the business have proceeded largely inline with management’s expectations.
“Unusually Turbulent, Disappointing Quarter”
Nvidia’s financial report further noted that China’s “deteriorating macroeconomic conditions” have led to lower demand for the company’s gaming GPUs. Additionally, sales of several high-end Turing™ architecture GPU models (manufactured by Nvidia) “were lower than expected.” Commenting on firm’s business strategy, Jensen Huang, the CEO and founder at Nvidia, remarked:
Q4 was an extraordinary, unusually turbulent, and disappointing quarter. Looking forward, we are confident in our strategies and growth drivers. The foundation of our business is strong and more evident than ever – the accelerated computing model NVIDIA pioneered is the best path forward to serve the world’s insatiable computing needs.
Nvidia Recorded $5.8 Billion In Gross Profits During FY 2017
Huang, an electrical engineering graduate from Stanford University, explained that Nvidia has “excellent strategic investments” in the “gaming, design, HPC, AI and autonomous vehicles” markets. He revealed that these industries are “growing” and that they’ll be “very large” in the foreseeable future.
Towards the end of 2018, Nvidia share prices fell by 54% which notably made it the worst performer out of all S&P 500 company stocks. However, Nvidia’s market value has increased considerably as the company recorded over $5.8 billion in gross profits for FY 2017, up from about $2.7 billion in gross profits for FY 2015.
Nvidia’s latest financial report clarified that the update “does not present all necessary information for an understanding of Nvidia’s financial condition as of Jan. 27, 2019.” Moreover, the report does not include any details about the “results of operations [and revenue] for the quarter and fiscal year ended Jan. 27, 2019.” In a letter to shareholders, Nvidia’s CEO “outlined the key [expected] drivers” for growth. These include “new applications of [the firm’s] datacenter GPUs” such as “deep learning inference, data analytics, and machine learning.”
Notably, Nvidia’s (NVDA) shares are trading at about $138, down 22% following the company’s release of its Q4 2019 financial outlook report.
American Law Firm Sues Nvidia
On December 24th, 2018, Schall Law, a US-based shareholder rights litigation firm, filed a class action lawsuit against Nvidia. The law firm has alleged that Nvidia violated securities laws as it “made false and misleading statements to the market. According to the lawsuit document:
Nvidia touted its ability to monitor the cryptocurrency market and make rapid changes to its business as necessary. The Company claimed to be “masters at managing our channel, and we understand the channel very well.” NVIDIA also claimed to the market that any drop off in demand for its GPUs amongst cryptocurrency miners would not negatively impact the Company’s business because of strong demand for GPUs from the gaming market.
Schall Law’s notice also stated that investors who may have lost more than $100,000 after investing in Nvidia’s stock between August 10, 2017 and November 15, 2018 should contact the firm before February 19, 2019.
