Nvidia announced its financial results for the second quarter of its fiscal year 2023 on Wednesday. The client PC business was down, but the automotive and data center businesses were strong.
Nvidia’s gaming, professional graphics, mining and OEM business segments experienced significant declines both in the prior quarter and the year. So he had to warn investors that he expects poor sales of games and his ProViz graphics products to continue for some time. Meanwhile, the company has stated that it will be unveiling its next-generation Ada Lovelace architecture next month, but he has not actually revealed when the GeForce RTX 40 series graphics boards will be available.
In contrast, Nvidia’s data center and automotive hardware shipments increased significantly compared to the same period last year. The company’s Hopper H100 computing GPU is now in full production and ready to ship, and is expected to be operational again in the third quarter of fiscal 2023.
“As for the hopper, we are now in full production and are competing to provide hoppers to all the CSPs[cloud service providers]who are desperate to get them,” said Huang. says. This is with HGX he is multiple hoppers on the system tray. It’s really a supercomputer on a motherboard, along with networking and switching gear. A huge amount of resources have been applied from all his CSPs around the world and us to get Hopper to them.We plan to ship a considerable amount [number of] Q4 Hopper.
“We will get over this [inventory correction] Over the next few months, we will move forward into next year with a new architecture,” said an Nvidia head. “I look forward to discussing this further at his GTC next month.”
Nvidia’s revenues totaled $6.74 billion in the second quarter of fiscal year 2023, down 19% sequentially and up 3% year over year. The company’s net income fell to $656 million, down 59% quarter-over-quarter (QoQ) and 72% year-over-year (YoY). Additionally, Nvidia’s gross margin fell from around 65% in the most recent quarter to 43.5%.
Gaming, ProViz, Mining, OEM Down
In the second quarter of fiscal 2023, Nvidia faced multiple challenges. These include macroeconomic conditions (consumer inflation and uncertainty), high inventory levels in the channel (as the company sold graphics cards aggressively in the previous quarter), and softening demand from end users. And so on. Graphics card prices as a result of inventory adjustments by partners (because gamers expect Ada Lovelace to launch soon and due to uncertainty), and softening demand and increased supply due to competition reduction.
As a result of the challenging environment, Nvidia’s gaming revenue declined to $2.042 billion from $3.62 billion in Q2 2022 and $3.62 billion in Q1 2023.
Colette Kress, Chief Financial Officer of Nvidia, said: “In addition to reducing sell-ins, we have implemented pricing programs with our channel partners to address the difficult market conditions we expect to continue into the third quarter.”
Note that Nvidia’s Q2 gaming revenue was still significantly higher when compared to the company’s FY21 Q2 revenue of $1.654 billion (~Q2 2020). This shows that chip designers have benefited greatly from the growing demand for discrete GPUs for gaming PCs, rising prices for standalone graphics cards and the craze for cryptocurrency mining.
Nvidia sold nearly $7 billion worth of graphics processors to partners in Q4 2022 and Q1 2023. However, as we prepare for the launch of the next-generation Ada Lovelace family (which we’ll discuss at next month’s GTC event) and need to wipe out the existing GPUs, we’re shipping fewer GPUs than market demand. and the price should be lowered.
Nvidia CEO Jensen Huang said:
Nvidia’s professional visualization business earned $496 million in the second quarter of fiscal year 2023. That’s down 20% quarter-on-quarter and down 4% year-over-year. Nevertheless, Nvidia’s professional GPU sales increased 144% compared to his Proviz solution sales in the same quarter two years ago.
In recent years, Nvidia’s OEM and “other” business (which will now include CMP solutions in early 2021) has been far less pushy as the company has shifted its focus to gaming graphics processors. So it wasn’t particularly unexpected that Nvidia’s OEM revenue totaled $140 million, down 11% quarter-on-quarter (due to lower OEM sales of laptops) and down 66% year-over-year ( CMP mining GPU sales are negligible).
Data Center and Automotive Up
However, while Nvidia’s sales of PC components declined, sales of parts for data center and automotive applications increased significantly.
Nvidia Is More A Data Center Company Than A PC Gaming Company After Nvidia’s Data Center Revenues Hit $3.86 Billion In Q2 Fiscal Year 2023 (+1% QoQ, +61% YoY) It is no exaggeration to say that Meanwhile, the company said it will have to delay delivery of certain data center orders from the second quarter to the third quarter due to supply chain disruptions. As a result, he was able to raise $287 million for orders originally scheduled for delivery, while missing the components he needed to ship some of his more complex products. I could not do it.
Nvidia has been in the automotive business for quite some time, but its automotive BU was so focused on infotainment systems that it never made a lot of money and many consider it the company’s worst performing business. I was calling. However, in the second quarter of fiscal 2023, his Nvidia’s automotive division revenue totaled $220 million (surpassing his $200 million for the first time), up 59% quarter-on-quarter and compared to the same period last year. increased by 45%. The company expects its automotive business to grow as automakers adopt his Nvidia Drive self-driving and AI cockpit solutions.
Nvidia forecasts profit of $5.9 billion ±2% for the third quarter of 2023.
The company expects quarter-on-quarter revenue declines in gaming and professional graphics processors as partners destock while the company prepares the market for the rollout of its GeForce RTX 40 series. I’m here. Speaking of the Ada Lovelace family, it’s worth noting that Nvidia has promised to talk about its next-generation GPU architecture at his GTC. September 19-September 2022 (opens in new tab)However, it did not disclose projections for the new family’s financial impact on earnings this fiscal year.
PC GPU sales may not be spectacular this year, but Nvidia expects data center and automotive revenues to rise. According to the company, the next generation of his H100 (Hopper) computing GPU is now in full production. Expensive SXM modules can be shipped to data center partners, and expensive DGX systems can be shipped to anyone who needs a ready-to-use supercomputer.