Nvidia will report its Q2 earnings amid falling game and PC sales. (Photo by Justin Sullivan/Getty Images)Nvidia (NVDA) is set to announced its fiscal Q2 earnings after the bell on Wednesday amidst a slowdown in PC and gaming sales following the explosive growth the sectors saw in 2020 and 2021. Here's what analysts are expecting from the graphics chip maker compared to how it performed in the same quarter last year.
Revenue: $6.7 billion expected versus $6.5 billion last year
Adj. EPS: $0.53 expected versus $1.04 last year
Data Center: $3.8 billion expected versus $2.4 billion last year
Gaming: $2.0 billion expected versus $3.1 billion last year
Nvidia released its preliminary earnings on Aug. 8, warnings investors that the company was going to miss on its own expectations for the quarter as gaming sales continued to plummet.
"The shortfall relative to the May revenue outlook of $8.10 billion was primarily attributable to lower sell-in of Gaming products reflecting a reduction in channel partner sales likely due to macroeconomic headwinds," the company said in a statement at the time.
"In addition to reducing sell-in, the company implemented pricing programs with channel partners to reflect challenging market conditions that are expected to persist into the third quarter."
According to the company's preliminary numbers gaming segment revenue dropped an eye-watering 33% year-over-year and 44% quarter-over-quarter. Fellow gaming companies including Microsoft (MSFT), Sony (SONY), Nintendo (NTDOY), and others have also reported a drop in game hardware spending.
It's not just sales of individual graphics cards that are hurting Nvidia, though. The slowdown in PC sales is also slamming the company. In Q4 2020, PC shipments grew 26.1% year-over-year to 91.6 million units, according to IDC.
Since then, however, sales have fallen off considerably, with Gartner reporting a 12.6% decline in Q2 2022. Full year PC sales are expected to decline by 9%.
While Nvidia's gaming segment is taking a beating, the company said its data center business grew 61% in the quarter. The data center segment is Nvidia's main growth engine, as companies increasingly turn to machine learning and artificial intelligence, they need high-powered chips that can handle multiple parallel processes with ease. And Nvidia's graphics chips are a winner in that regard.
Still, chip stocks have been hammered during this year's market selloff, with Nvidia falling as much as 41% year-to-date and competitors Intel (INTC) and AMD (AMD) dropping 35% and 34%, respectively. When they'll turn the corner is still anyone's guess.
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