Nvidia is on track to report quarterly sales below that of rival AMD for the the first time since 2014.
Nvidia Corp. executives on late Wednesday forecast another revenue shortfall in the current quarter, after confirming an earlier warning by showing a sharp reduction in profit, while the chip maker assured analysts it was working its way through inventory prior to the release of its new chip architecture.
That puts Nvidia on track to report quarterly sales below that of Advanced Micro Devices Inc. AMD, +0.26% for the first time since the third quarter of 2014. In its recent earnings report, AMD forecast third-quarter sales of $6.5 billion to $6.9 billion. Throughout the call, Nvidia executives stressed that supply-chain problems, and not demand, were the main culprits lowering the outlook.
Nvidia also booked a $1.22 billion inventory charge for data-center and gaming products, given its revised expectations. The company said about $570 million of the charge is for inventory on hand and about $650 million of it is for inventory purchase obligations “in excess of our current demand projections.”
“We wanted folks to understand that prior-architecture chips and things that we looked at when we reassessed our estimates for demand going forward, and the inventory that we both had on hand and procured for, we took an adjustment,” Kress told MarketWatch. PC sales have pulled back considerably after a two-year surge, and spending on videogames and gear for them has also come back to earth. At the same time, drops in cryptocurrency prices have made mining less profitable; Nvidia cards have been used extensively to mine for Ethereum ETHUSD, -1.66% and other crypto.
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