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Nvidia reports third-quarter earnings as chip demand remains weak


Graphics chip giant Nvidia (NVDA) will report third-quarter earnings after the closing bell on Wednesday, as the industry continues to grapple with slowing chip demand, rising interest rates and foreign currency difficulties.

Here’s what Wall Street expects from the company for the quarter, compiled by Bloomberg, compared to the company’s performance for the same period last year.

  • Turnover: $5.8 billion expected versus $7.1 billion last year

  • Adjusted EPS: $0.70 expected vs $1.17 last year

  • Game revenue: $1.3 billion expected versus $3.22 billion last year

  • Data center revenue: $3.7 billion compared to $2.9 billion last year

Chip stocks have fallen sharply this year, as consumer and business demand for electronics has fallen following the industry’s explosive growth during the pandemic. Consumers didn’t need many computers after buying them during the downtime, and companies already had plenty of machines for their remote workers and mix.

Jensen Huang, CEO of Nvidia, makes a point during her keynote address at CES in Las Vegas, Nevada, US January 7, 2018. REUTERS/Rick Wilking

Jensen Huang, CEO of Nvidia, makes a point during her keynote address at CES in Las Vegas, Nevada, US January 7, 2018. REUTERS/Rick Wilking

Nvidia cut chip production in the second quarter, with CEO Jensen Huang telling investors that the company is working to rearrange inventory according to customer demand for chips.

Demand for Nvidia’s graphics chips during the pandemic was so high that they sold for hundreds of dollars more than retail. But with consumers returning to pre-pandemic life, demand for chips has dropped and prices have dropped to normal levels.

Nvidia is also working to ensure that it can still sell its premium products in China. Nvidia began offering its new A800 chip in the country in the third quarter to replace the A100 chip that the US government deemed too powerful to ship to China. The government is concerned that China will use the technology for military applications.

Ahead of Wednesday’s earnings, Nvidia announced a partnership with Microsoft (MSFT) to build one of the most powerful AI supercomputers in the world using Nvidia’s chips and Microsoft’s Azure infrastructure. The computer is designed to help train large-scale AI systems.

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