Colette Kress, the CFO of Nvidia, told Colette Kress on Wednesday, after the company released its fiscal first-quarter earnings, that the company will slow down the rate at which it hires people and keep its spending in check as it deals with a tough macroeconomic climate.
Analysts were wrong about Nvidia’s sales and earnings, but the stock dropped more than 10% in extended trading after the chipmaker gave a cautious forecast for the next quarter.
Here’s how Nvidia did for the quarter that ended on May 1 compared to what the Refinitiv consensus estimates were:
EPS: $1.36, compared to the $1.29 that was expected.
$8.29 billion in revenue versus $8.11 billion expected
Analysts expect Nvidia’s sales for the current quarter to be around $8.1 billion, which is less than what they expected, which was $8.54 billion. In a time of rising inflation and macroeconomic instability, investors are avoiding fast-growing stocks in favor of safer ones. For example, Nvidia stock is down almost 43% so far in 2022.
In a statement, Jensen Huang, the CEO of Nvidia, said that the company is facing a “challenging macro environment.” On a basis other than GAAP, the company’s operating costs went up 35% from last year to $1.6 billion.
Nvidia said that its revenue for the current quarter would have been $500 million less if the Russian war in Ukraine and the COVID lockdowns in China had not happened.
On the other hand, Nvidia continues to make a lot of money and sees a lot of demand for its graphics chips, which are used a lot for advanced gaming and cloud-based AI. The company’s total sales went up by 46 percent compared to the same time last year, and its main businesses, data centers, and games, also did better during the quarter.
Nvidia’s data center division, which sells chips to cloud computing businesses and corporations, grew 83 percent annually to $3.75 billion, which was more than the company’s main gaming division, which sold graphics cards for advanced 3D games and grew 31 percent annually to $3.62 billion.
Nvidia says that the growth of gaming is being driven by graphics cards for laptops and chips for game consoles. Nvidia makes the chip that runs the Nintendo Switch.
The company also said that its gaming graphics chips, which were hard to find at retail prices the year before, had “normalized,” which means that the shortage is starting to get better. Nvidia thinks that its gaming revenue will drop “in the teens” in the next quarter.
Smaller parts of the company’s business did not always do well. The company’s professional desktop visualization business grew by 67 percent from last year to $622 million, but its automotive business fell by 10 percent to $138 million.
Nvidia said earlier this month that it had settled with the Securities and Exchange Commission (SEC) over statements made in 2017 about how mining cryptocurrency helped the company grow. Nvidia said that its cryptocurrency-specific products, called CMP, caused a 52 percent drop in other revenue, which was “nominal” during the quarter.
Nvidia said that its board of directors has agreed to buy back another $15 billion worth of shares by the end of the year. It spent $2.1 billion on buying back shares and paying dividends in the first quarter.
Arm is a company that makes technology for microprocessors. Earlier this year, Nvidia backed out of a big deal to buy the company. Based on GAAP, Nvidia had to pay a $1.35 billion termination penalty, which cost them 52 cents per share.