Nvidia shares plunge after weaker-than-expected revenue guidance
August 10, 2022
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Nvidia ($NASDAQ:NVDA) shares plunged 8% on Monday after the GPU maker preannounced weaker-than-expected second-quarter revenue, while citing a reduction in channel partner sales. For the period ending July 31, Nvidia said it generated $6.7B in revenue, down 19% year-over-year, compared to expectations of $8.1B. The company blamed the shortfall on gaming-related revenue, as gaming revenue fell 44% sequentially and 33% year-over-year to $2.04B. Conversely, data center revenue rose 1% sequentially and 61% year-over-year to $3.81B. This disappointing guidance comes as a surprise given that Nvidia had previously issued strong guidance for the second quarter. The company now faces increased pressure to deliver on its promise of strong growth in the second half of the year. Do you think this will affect NVIDIA market and earnings in the long term? It is difficult to say at this point. The company is still expected to generate strong growth in the second half of the year, but the weak guidance could hurt investor confidence.
Market Reaction
On Monday, NVIDIA stock opened at $175.0 and closed at $177.9, down more than 8% from the previous day’s close. Wall Street analysts were mostly negative on the news, with some saying that the company’s growth prospects are now in doubt.
VI Analysis
Company’s fundamentals reflect its long term potential, below analysis on NVIDIA are made simple by VI app. VI Star Chart shows that NVIDIA is strong in asset, dividend, growth, profitability. NVIDIA is classified as ‘gorilla’, a type of company that achieved stable and high revenue or earning growth due to its strong competitive advantage. High growth companies are deemed more risky as they attempt to grow faster. NVIDIA has a high health score of 8/10 considering its cashflows and debt, is capable to sustain future operations in times of crisis.
Summary
Investors are clearly worried about Nvidia’s near-term prospects, and with good reason. The company is facing challenges in several of its key markets, including gaming and data center. Despite these challenges, Nvidia remains a leader in cutting-edge technologies like artificial intelligence and autonomous driving. The company’s long-term prospects are still very bright. For investors willing to take on some extra risk, Nvidia shares could be a bargain at current levels.
