Nvidia stock rally loses steam on cloudy outlook for server chips, full-year earnings

Shares of Nvidia Corp. posted earnings after gains in the extended session on Thursday after the graphics chip maker did not offer a full-year outlook and said data center sales could remain weak.


NVDA, + 0.38%

The shares, which rose 7% after the earnings report was published on Thursday afternoon, began to shed those gains after CFO Colette Kress said data center sales were expected to remain weak. in the second quarter, and dispensed with providing a guide for the entire year.

In February, Nvidia had forecast a "flat to light" annual income, compared to the $ 11.72 billion reported in fiscal year 2019. Stocks rose 0.7% after hours.

"The pause in data center spending around the world is likely to remain in the second quarter and visibility will remain low," Kress said in the conference call with badysts. "And in the games, the CPU shortage, while improving, will affect the initial ramp of our laptops business."

"At the moment, we do not plan to give a full year of general guidance," Kress said, although he said drivers who had followed the guidance from the previous year "were still online."

Nvidia provided a forecast for the current quarter, projecting revenues of $ 2.5 billion to $ 2.6 billion, while badysts had forecast revenues of $ 2.540 billion.

Revenues from data centers, Nvidia's second largest commercial segment, fell 10% to $ 634 million compared to the first quarter of the previous year, while badysts surveyed by FactSet expected data center sales will decrease approximately 5% to $ 663.7 million.

For more information: the promise of a magical bounce for technology comes with little evidence to back it up

In general, the company reported net income in the first quarter of $ 394 million, or 64 cents per share, compared to $ 1.24 billion, or $ 1.98 per share, in the same period of the previous year. Analysts polled by FactSet had forecast earnings of 58 cents per share.

Revenue fell to $ 2.22 billion from $ 3.21 billion in the same quarter of the previous year. Analysts had forecast revenues of $ 2.2 billion.

"Nvidia is back on an upward trajectory," Jensen Huang, founder and CEO of Nvidia, said in a statement. "Despite the short-term hiatus in customer demand for hyperscale, the AI ​​application continues to accelerate."

Gaming, the largest segment of Nvidia, recorded a fall of 39% in revenues to $ 1.06 billion, but that was better than the $ 933.5 million that Wall Street expected. In the call, Huang said the sales of games in China were "vibrant."

See also: Here are the stocks to buy if a total trade war breaks out between the United States and China, says Goldman

Professional viewing sales increased 6% to $ 266 million, while the street expected $ 289.9 million. Car sales increased 14% to $ 166 million, while badysts expected $ 163.8 million, and "OEM & IP", or original equipment and intellectual property manufacturers, revenues fell 74% to $ 99 million, figure lower than the $ 121.4 million Street expected.

Nvidia shares closed 0.4% higher at $ 160.19 in the regular session on Thursday, but fell 34.9% in the last year. Stock options before earnings had involved a reaction of the stock more domestic than usual.

The PHLX semiconductor index

SOX, -1.68%

It ended with a 1.7% drop on Thursday amid concerns about banning Huawei equipment in the United States, while the Dow Jones industrial average

DJIA, + 0.84%

It rose 0.8%, the S & P 500 index.

SPX, + 0.89%

gained 0.9% and the Nasdaq Composite high-tech index

COMP, + 0.97%

Advanced 1%.

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