Updated · Jun 24, 2022
Nvidia Forecasts Decline in Video Game Market, Stock Falls
Updated · May 26, 2022
The chipmaker reported its first-quarter earnings on Wednesday. Its shares fell following a light forecast for this quarter.
Lower Earnings Expected
Nvidia has made a light forecast that points to a decline in the video game market, leading to a slump in the sales of its chips. This follows the release of its 2022 Q1 earnings and sales which managed to beat estimates from analysts.
On Wednesday, the chip designer predicted that its Q2 revenue would add to about $8.10 billion. This is slightly below the $8.45 billion on average that analysts expect it will earn over the same period.
The company’s stock price fell by more than 10% following that light forecast. Over the course of the year so far, Nvidia has seen its stock lose over 43% of its value, following a slump that has affected the entire tech industry.
In response to Reuters, CEO Jensen Huang predicted a decline in a market worth over $200 billion.
“Overall the gaming market is slowing,” he said. Huang added that because of this, it would reduce what it sells in the China market. He named Russia’s war in Ukraine and the COVID lockdown in China as being part of the reasons for the disappointing outlook.
However, the chief executive continues to see strong demand for its graphics processors, popular for their application in gaming and AI.
The company's revenue for the first quarter was a record $8.29 billion, a 42% increase from a year ago. From that, it reported a net income of $1.61 billion.
Daniel is an Economics grad who fell in love with tech. His love for books and reading pushed him into picking up the pen - and keyboard. Also a data analyst, he's taking that leap into data science and machine learning. When not writing or studying, chances are that you'll catch him watching football or face-deep in an epic fantasy novel.
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