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Nvidia beats on earnings, forecast falls short

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Yahoo Finance Live anchors discuss quarterly earnings for Nvidia.

Video Transcript

JARED BLIKRE: But I got a big ticker that I want to talk about now, Nvidia. It's down about 4% in the premarket, and that's after the company gave a weaker-than-expected forecast for the second quarter, and this despite an earnings beat from the chipmaker.

And let's go-- well, we'll take a look at that for a second. Then we'll do some charting. I do have some analysts' commentary, some hot takes. Here's Bloomberg. They're sending Nvidia's GPU servers and chip use continues to expand in data centers for training and inference workloads. The company expects supply shortages to ease through the second half on networking side, which, along with the launch of its CPU chip, could further expand its share in data centers.

And just looking at the stock here, this stock has been cut in half. I'm going to put-- show everybody what's happened. It's off 51% from its 52-week high, and that would be its record high as well. And high-beta stocks, they go up quickly, and they come down hard sometimes. Let's take a look at-- here's two years, and you can see really been just cut in half and at the lower end now of its trading range over long periods of time.

JULIE HYMAN: Yeah, I should say the stock was down a lot more after the earnings came out last night and after that forecast came out.

JARED BLIKRE: Yes.

JULIE HYMAN: So it has recovered quite a bit from the lows there.

The shortfall in the forecast seems to primarily be from two sources, China and the supply shutdown-- the supply slowdown and Russia as well because of the gaming demand in particular coming from Russia. The company said that cost it $500 million worth of sales in the current quarter. So that's what the shortfall is going on-- what is going on here.

And there is some analyst debate here about the outlook for gaming, which they say some were reassured by this outlook, saying that this kind of clears the decks and prepares them for the introduction of their next gaming chip that's coming in the second half of the year and that that should be a strong product for them, but there are still some macroeconomic concerns about the gaming outlook.

Remember, Nvidia had primarily been a gaming chip maker and then sort of reinvented itself.

JARED BLIKRE: Crypto too.

JULIE HYMAN: Yes, and crypto is part of that. But now it's big in data center. It's big in AI. It's big in automotive, which was actually a weak spot in the quarter where it saw sales fall 10%.

JARED BLIKRE: Yeah, they just got poached too by Luminar.

JULIE HYMAN: Yes, exactly. So, you know, sort of a mixed picture, I think, and the company is also saying it's going to slow the pace of hiring.

JARED BLIKRE: Yeah, one more comment. I was breaking the earnings down. Yesterday evening, actually, we had a guest on afterwards, an analyst, who said-- made the comment that they are a serial under guider. In other words, they guide low and are pretty conservative on purpose, and so they tend-- maybe they're just setting themselves up for a beat farther down the road--

JULIE HYMAN: Could be.

JARED BLIKRE: --third quarter, fourth quarter. But--

JULIE HYMAN: Could be.

JARED BLIKRE: --second quarter is right now.

JULIE HYMAN: Yes, exactly.

JARED BLIKRE: So we've got to wait a little bit.

JULIE HYMAN: Yes, we do.