Nvidia Q4 Revenue Evaluation Descends, Indicating Crypto Mining Decline in China

In a press release published on January 28, NVIDIA Corp updated its financial guidance for the fourth quarter of the fiscal year 2019. The company indicated that forecasted sales were weaker of its Gaming and Datacenter platforms, due to a slow down in the global economy, especially in China.

The company’s updated Q4 revenue is expected to be at $2.20 billion, objected to the previous Q4 projection of $2.70 billion according to the press release.

The depreciating macroeconomic conditions, particularly in China, impacted consumer demand for NVIDIA gaming GPUs (Graphics Processing Unit). Additionally, sales of certain high-end GPUs using NVIDIA’s new Turing architecture were lower than expected.

The GPU products deliver an advanced leap in performance and innovation with real-time ray tracing and AI, but a few customers might have delayed their purchase while waiting for lower price points.

Jensen Huang, founder and CEO of NVIDIA stated in a press release report – “Q4 was an extraordinary, unusually turbulent, and disappointing quarter; Looking forward, we are confident in our strategies and growth drivers.” Huang also published a letter addressing shareholders.

Huang further stated that:

“The foundation of our business is strong and more evident than ever – the accelerated computing model NVIDIA pioneered is the best path forward to serve the world’s insatiable computing needs.  The markets we are creating – gaming, design, HPC, AI and autonomous vehicles – are important, growing and will be very large. We have excellent strategic positions in all of them.”

NVIDIA foresees its GAAP (Generally Accepted Accounting Principles) and non-GAAP gross margin to be affected by approximately $120 million in charges for excess DRAM (Dynamic Random Access Memory).

The above update is an estimate by the company based on the information available to management as announced in the press release. The update is subjected to further changes upon completion of the company’s standard quarter and year-end closing procedures.

NVIDIA PREDICTS

It is likely that NVIDIA may identify items that require it to make adjustments to the financial information set forth above and those changes could be material.

NVIDIA does not indicate to update such financial information prior to release of its fourth quarter and year-end financial statement information, which is currently scheduled for February 14.

In addition to U.S. GAAP financial measures, NVIDIA’s press release covers preliminary estimates of non-GAAP measures of specific components of financial performance. The initial forecast of non-GAAP measures includes non-GAAP gross margin, operating expenses, income tax expense and other income (expense).

NVIDIA believes the display of its non-GAAP financial measures improves the user’s overall understanding of the company’s financial performance.

Recently, NVIDIA’s competitor AMD had collaborated with Consensys to develop a cloud computing architecture called W3BCLOUD.   

It seems that AMD is pitching aggressively on blockchain-based cloud computing infrastructure. The firm is looking to capitalize and stimulate the adoption of decentralized applications (dApps).

We need to wait and see, whether NVIDIA will show interest in blockchain based technology or will it bring in new marketing strategies to make profits in the next fiscal year.