Nvidia (NVDA) will report its fiscal first quarter earnings after the bell on Wednesday, as the company looks to recover from a steep decline in its gaming sales and a sequential drop in its datacenter business last quarter.
Nvidia is at the center of the AI explosion thanks to its high-powered graphics cards and server products, and its stock price is soaring. Over the last year, shares of Nvidia have jumped 77%, while rival AMD (AMD) has jumped 12%. Intel (INTC) shares are down 30% in the same timeframe.
Here’s what Wall Street is expecting from the report, as compiled by Bloomberg, versus how Nvidia performed in the same quarter last year.
Revenue: $6.5 billion expected versus $8.3 billion in Q1 last year
Adj. EPS: $0.92 expected versus $1.36 in Q1 last year
Gaming: $1.9 billion expected versus $3.6 billion in Q1 last year
Data center: $3.9 billion expected versus $3.8 billion in Q1 last year
While shares of Nvidia are riding the AI wave, thanks to the introduction of OpenAI’s ChatGPT and Microsoft (MSFT) and Google’s (GOOG, GOOGL) own generative AI efforts, the company is still contending with a viscous slowdown in the gaming industry.
Much of that has to do with the broader downturn in consumer spending on electronics following the explosive growth the industry experienced during the pandemic. With nothing to do but sit at home, consumers bought up graphics cards and similarly equipped PCs to pass the time.
Now that gamers have those systems in their hands, however, there’s little reason to upgrade anytime soon. Intel and AMD are experiencing the same kind of problems with their own client computing groups.
But the slowdown should be coming to an end soon. Wall Street expects Nvidia to post revenue growth in its gaming business for the first time in a year in Q2, according to Bloomberg data. That would go a long way to helping Nvidia’s overall revenue growth, which declined in Q3 and Q4 last year, and is set to fall again in Q1.
That said, the company’s data center business continues to perform. Still, growth is slowing there as well. Analysts expect Nvidia to post 4% year-over-year growth in the sector compared to 83% growth in the same quarter last year.
That could begin to turn around in Q2, though, with Wall Street looking for 12% growth in Q2. And with the AI explosion set to continue, Nvidia is primed to see some major benefits.
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