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Nvidia preliminary Q2 revenue falls short on gaming weakness

Yahoo Finance Live anchors discuss Nvidia releasing preliminary revenue numbers.

Video Transcript

- I've got to bring you some breaking news now because NVIDIA is cutting its forecast, a company now is saying that its second quarter revenue in its fiscal second quarter revenue will be $6.7 billion. Previously, that forecast had been $8.1 billion. NVIDIA had originally been scheduled and still is scheduled to report its full earnings on August 24, but obviously saw fit here to come out and manage the Street's expectation. Where is the shortfall here? Has to do with gaming products.

And this is something that we flagged for you folks as we looked at what was going on with some of the other chip makers and elsewhere in the gaming industry. So as you were hammering this point last week, you said watch NVIDIA and the gaming revenue. And voila, here it is.

- Yeah, all down. I'll go, all right. Thanks, Julie. I appreciate that. That's what we do, connect the dots, that's what we do. Also, NVIDIA noting-- well, first of all, you saw AMD weakness in gaming. That did not normally happen, doesn't normally happen, AMD. The fact that it did, big red flag. NVIDIA calling it out here.

Now on a positive side, data center good. Now AMD did say the data center business was a good business. So NVDIA, good data center. AMD, good data center, not good data center, that'd be Intel. But by and large, we have now seen warnings over the past month and a half from Micron, Intel, AMD, and NVIDIA. This is a different now landscape developing for really what had been one of the hottest sectors of tech going on two years.

- Yeah. Reduction in channel partner sales likely due to the macroeconomic headwinds they cited within this update that they did provide, and then addition to reducing the sell. And the company also said that they had moderated some of the pricing programs with those partners. And so, if you see a reduction in that pricing to really kind of reflect what partners are willing to pay at this point in time or what they can pay as their own finances are being moderated right now as well, that's certainly going to have a knock on effect for the financials of NVIDIA as well. And we'll see if that kind of hits some of the other chip makers, as you've been tracking too.

- One other thing to note, and Julie, you've been covering NVIDIA a lot, you and Dan Howley. NVIDIA noting-- first time I've ever heard this from the company, they have slowed operating expense growth. Now I've been covering, I've been following NVIDIA for some time. I've not seen them mention that before. But it comes, of course, what they're calling a significant decline in gaming product sales, a little worse tone than what AMD said last week, but still now NVIDIA jumping on that board and tied tech cutting expenses.

- Yeah and taking $1.32 billion of charges in the quarter because of inventory and related reserves. So, basically, this inventory now building up once again for the chip sector. So we really have to keep an eye on this and keep an eye on the rest of the chips, which we're going to check on shortly.