'PC Sales Slowdown Continues' Nvidia Shares Drop 5% on Bleak Q3 Outlook

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] U.S. semiconductor company Nvidia saw its stock price plunge more than 5% after issuing earnings guidance for August to October this year that fell far short of market expectations.

According to Bloomberg and other sources on the 24th (local time), Nvidia forecasted in its earnings announcement that its revenue for the third quarter of fiscal year 2023 (August to October) would be $5.9 billion (approximately 7.9 trillion won). This projection is significantly lower than the analysts' average estimate of $6.92 billion. The gross margin was predicted to be 65%.

Nvidia had already signaled a deterioration in earnings when it announced its second quarter fiscal year 2023 results (May to July) on the 8th. This was due to the continuous slowdown in PC sales, which was expected to negatively impact the gaming segment, including high-performance graphics cards installed in desktops and laptops, Nvidia's core products.

For the second quarter, Nvidia confirmed that revenue increased by 3% year-on-year to $6.7 billion, while net income dropped 72% to $656 million. Gaming segment revenue was recorded at $2.04 billion, down 44% from the previous quarter and 33% year-on-year.

Nvidia is currently experiencing a rapid shift from semiconductor supply shortages to an accumulation of unsold inventory. As a result, advance payments for raw materials are being made, production in response to demand is decreasing, and finished goods inventory is increasing. Nvidia's inventory level in the second quarter was about $3.89 billion, up nearly $1.8 billion from $2.11 billion in the second quarter of last year. The net purchase amount reached $9.22 billion, nearly doubling compared to the same period last year.

Jensen Huang, Nvidia's CEO, said, "We are navigating supply chain transitions amid challenging macroeconomic conditions," adding, "We will work to resolve these issues."

Following the earnings guidance announcement, Nvidia's stock price fell more than 5% in after-hours trading.

This content was produced with the assistance of AI translation services.