News Nvidia 1Q23 Earnings

[Hitman928]

Nvidia announced 1Q earnings. They have become a semi juggernaut thanks to their data center business. More to come.

• Quarterly revenue of $7.19 billion, up 19% from previous quarter
• Record Data Center revenue of $4.28 billion
• Second quarter fiscal 2024 revenue outlook of $11.00 billion

Big news is that they expected 2Q revenue of $11B, up 53% from Q1 and 69% y/y.



*Note: Nvidia follows a fiscal schedule but I am putting everything in terms of the normal calendar year even though there is about a 1 month difference (Feb. - Apr for Nvidia).

 

[Saylick]

Dang, even at their ridiculously high forward P/E ratio, the stock is shooting up 15% in after hours.

 

[Hitman928]

Data Center

• First-quarter revenue was a record $4.28 billion, up 14% from a year ago and up 18% from the previous quarter.

Gaming

• First-quarter revenue was $2.24 billion, down 38% from a year ago and up 22% from the previous quarter.

Professional Visualization

• First-quarter revenue was $295 million, down 53% from a year ago and up 31% from the previous quarter.

Automotive

• First-quarter revenue was a record $296 million, up 114% from a year ago and up 1% from the previous quarter.

 

[Hitman928]

Dang, even at their ridiculously high forward P/E ratio, the stock is shooting up 15% in after hours.

$11B in 1 quarter will smash their previous record revenue of $8.3B and that was during the insane mining/pandemic craze. They must have some huge data center deals they expect to be counting in the next earnings report.

 

[Hitman928]

I already said it before, but it continues to be more true as time goes on. Nvidia is a data center business now, gaming has taken a distant second place.

 

[Saylick]

I already said it before, but it continues to be more true as time goes on. Nvidia is a data center business now, gaming has taken a distant second place.

Correctomundo, which is why AMD and Intel are also vying for this very, very lucrative pie. What does it mean for consumers? I fear that we're going to get the short end of the stick so long as there's a better opportunity in the server space.

 

[USER8000]

Dang, even at their ridiculously high forward P/E ratio, the stock is shooting up 15% in after hours.

The stock market builds on hype.

But revenue is down $1 billion year on year because gaming revenue is down 40% and margins are down.

The profits are up because operating expenses are less than q1 2023.

Correctomundo, which is why AMD and Intel are also vying for this very, very lucrative pie. What does it mean for consumers? I fear that we're going to get the short end of the stick so long as there's a better opportunity in the server space.

Other companies will fill that gap. AMD and Intel are making faster integrated solutions,etc and consoles exists. Gamers will have other avenues,even if it isn't a desktop system but we have to be not so inflexible. Gaming is more than running games at 4K ultra raytracing - maybe games will concentrate more on quality,good optimisation,etc instead of graphics.

If companies want to re-release the same speed mass market cards every year,then game developers will not also push graphics to maximise sales. This will remove the requirement to constantly upgrade.

But everybody wants to do AI and in a few years it will be crowded in a global recession. Nvidia risks putting all its eggs into one basket at the risk of destroying high end pc gaming.

 

[jpiniero]

If I am reading it right, 2.24B is still decently more than they were making in gaming in 1Q 19.

 

[USER8000]

If I am reading it right, 2.24B is still decently more than they were making in gaming in 1Q 19.

It is 40% down YoY and that is long after Etherium went proof of stake.

They have over $5 billion in unsold inventories last quarter(doubled in a year):

Nvidia Stock: Inventory Glut And Revenue Decline (NASDAQ:NVDA)

Nvidia's Q4 revenue decreased by 21%, significantly impacted by its gaming market platform which saw a YoY decrease in revenues. Read my thoughts on NVDA stock here.

seekingalpha.com

There is a huge backlog of TSMC inventory too:

NVIDIA Faces Inventory Challenge as Graphics Card Prices Drop in Europe and North America

In the global markets of Europe and North America, a notable decline in graphics card prices, inclusive of the latest RTX 40 series, has been observed. This trend points towards potential sales diffic...

www.guru3d.com

225 days worth - it is why they are reducing TSMC orders for next year.

Client graphics card sales are down:

PC GPU Shipments Drop 35% Year-over-Year in Q4 2022: Report

But discrete desktop graphics card sales increased in Q4 2022 over the previous quarter.

www.tomshardware.com

The pandemic sales were at peak lower than the 2017 mining boom. It was mostly higher prices which contributed to the higher client revenue.

They are only making more,because graphics card prices are still high compared to 2019 but most of those unsold inventories are client cards. Those client cards are not what AI customers are after and the client market has shrunk.

The client side is what is dragging the company down now. I expect the high rtx4000 pricing will continue until the rtx3000 stock is finished.

 

[jpiniero]

It is 40% down YoY and that is long after Etherium went proof of stake.

Ethereum went PoS on Sept 15, 2022. That's less than a year ago. Gaming Revenue started slumping in Q2 22, but that was because of Crypto prices crashed and not PoS. Q1 was still peak Crypto... that's what's being compared.

 

[USER8000]

Ethereum went PoS on Sept 15, 2022. That's less than a year ago. Gaming Revenue started slumping in Q2 22, but that was because of Crypto prices crashed and not PoS. Q1 was still peak Crypto... that's what's being compared.

That is nearly 8 months ago.

If you look at the JPR figures Q4 2022 had lower shipments than Q4 2020,Q4 2019,Q4 2018 and Q4 2016. Q4 2018 was the last crypto rise.

All you showed is how overpriced cards are now.

Less cards are being shipped,but the prices are still very high. Hardly any discounts for the ampere cards(most still over mrsp). That is what you are seeing - less sales,but at higher prices. RTX4000 cards- tiny chips,least amount of memory and high prices. More of the same.

Nvidia is cutting orders($4 billion less in 2022 TSMC orders than 2021) and pushing back 3nm client cards.

This does not mean the card market is recovering. It's still shrinking,but nvidia and amd are charging more per sale. The slump now is more than the 2018 slump.

Less cards shipped, is also less people upgrading. More moves like the rtx4060 and rx7600 means more stagnation in performance.

If card sales are so good,why is nvidia discounting the 4070 in a month with free diablo 4? Why did amd drop the rx7600 price? I see 4090s for below the founders edition price now.

 

[Dribble]

225 days worth - it is why they are reducing TSMC orders for next year.

Last I heard they were buying every TSMC wafer they could get their hands on to build data centre/AI chips. That's why the revenue is going through the roof. Right now every wafer Nvidia has can be turned into AI chips and sold with huge profit margins. It's also shows why they want high profit margins for gaming - the gaming division is competing with the data center division for wafer allocation so they've gotta make it look like they will make decent money.

 

[Heartbreaker]

That is nearly 8 months ago.

This isn't horse shoes or hand grenades, so close doesn't count.

If you want to make YOY comparisons, then you have to look at the market situation a year ago, not 5 months later (Sept for Ethereum POS). That will be something to consider 2 quarterly reports in the future. Not this one.

A year ago GPU sales were still riding high on mining, so yeah GPU sales have tumbled since then. But with 22% QOQ increase, it looks like 4000 series isn't doing quite as bad as some proclaim.

 

[positivedoppler]

Last I heard they were buying every TSMC wafer they could get their hands on to build data centre/AI chips. That's why the revenue is going through the roof. Right now every wafer Nvidia has can be turned into AI chips and sold with huge profit margins. It's also shows why they want high profit margins for gaming - the gaming division is competing with the data center division for wafer allocation so they've gotta make it look like they will make decent money.

Sounds like a short term money grab with long term repercussion. Not forgetting your core customer is business fundamental.

 

[jpiniero]

Less cards are being shipped,but the prices are still very high. Hardly any discounts for the ampere cards(most still over mrsp). That is what you are seeing - less sales,but at higher prices. RTX4000 cards- tiny chips,least amount of memory and high prices. More of the same.

That Ampere for the most part didn't fall below it's MSRP... you would have to think that's evidence that it is still selling somewhat. The bad numbers the past quarters was because the sales were mostly product that was sitting on store shelves because of massive overproduction from nVidia not ramping down Ampere when they normally would have because they were intending to sell it to miners. That's over though.

 

[Mopetar]

Sounds like a short term money grab with long term repercussion. Not forgetting your core customer is business fundamental.

Look at the revenue numbers. Gamers aren't NVidia's core customers anymore.

That doesn't mean they aren't important, but don't expect them to be a priority either.

 

[Heartbreaker]

Sounds like a short term money grab with long term repercussion. Not forgetting your core customer is business fundamental.

Their core business is Gaming GPUs and Data Center GPUs.

They have a full stack of products for both, so they didn't forget core customers.

 

[Mopetar]

Their gaming GPUs have a lot of transistors dedicated to stuff that data center customers care about a lot more. Perhaps they can find some gimmick so that those transistors aren't completely pointless for gamers, but I'd probably much rather have more cores, cache, or communication (bus-width for those of you allergic to alliteration) than tensor cores.

It's pretty obvious that gamers are getting sold defective data center cards. NVidia could make two separate designs, but that means paying for separate masks and added development costs on top of having less product flexibility.

Obviously they're not going to stop selling gaming cards. NVidia isn't better off with ~$2 billion less in revenue. Who cares if the margins aren't as good as long as they're making more money and it's not at the expense of higher margin products.

 

[jpiniero]

Their gaming GPUs have a lot of transistors dedicated to stuff that data center customers care about a lot more. Perhaps they can find some gimmick so that those transistors aren't completely pointless for gamers, but I'd probably much rather have more cores, cache, or communication (bus-width for those of you allergic to alliteration) than tensor cores.

Workstation and I don't think the tensor cores take up that much space. The OFA does though, and it's especially egregious at the smaller dies. The cache also takes up a ton of room.

 

[Heartbreaker]

Their gaming GPUs have a lot of transistors dedicated to stuff that data center customers care about a lot more. Perhaps they can find some gimmick so that those transistors aren't completely pointless for gamers, but I'd probably much rather have more cores, cache, or communication (bus-width for those of you allergic to alliteration) than tensor cores.

It's pretty obvious that gamers are getting sold defective data center cards. NVidia could make two separate designs, but that means paying for separate masks and added development costs on top of having less product flexibility.

Obviously they're not going to stop selling gaming cards. NVidia isn't better off with ~$2 billion less in revenue. Who cares if the margins aren't as good as long as they're making more money and it's not at the expense of higher margin products.

Low end chips aren't going into the data center.

Tensor/Deep Learning cores are just table stakes at this point. Even phones have them. AMD's Phoenix APU has them. I expect RDNA 4 cards will have them as well.

 

[NTMBK]

Low end chips aren't going into the data center.

Tensor/Deep Learning cores are just table stakes at this point. Even phones have them. AMD's Phoenix APU has them. I expect RDNA 4 cards will have them as well.

Ditch the tensor cores to reduce die size, and ditch the thousands of overpaid AI software engineers trying to invent a way to make them relevant to gaming. Just give me a good card for $200.

 

[Heartbreaker]

Ditch the tensor cores to reduce die size, and ditch the thousands of overpaid AI software engineers trying to invent a way to make them relevant to gaming. Just give me a good card for $200.

That's like wanting to go back to cars without electronics in them.

You can't live in the past.

 

[jpiniero]

Nvidia rush orders lifting TSMC 5nm fab utilization

An influx of Nvidia orders requiring super hot runs (SHR) have shored up capacity utilization rates for TSMC's 5nm process platform to almost full, according to industry sources.

www.digitimes.com

Digitimes claims that nVidia has made a bunch of hot orders of N5 to the point where N5 is back to being nearly at full utilization. Might even be helping N7/N6 utilization too.

It probally means that N5/4 won't be seeing much in the way of price cuts and could be enough for N7/6 from having to do that too.

$11B in 1 quarter will smash their previous record revenue of $8.3B and that was during the insane mining/pandemic craze. They must have some huge data center deals they expect to be counting in the next earnings report.

Could be China.

 

[Heartbreaker]

Could be China.

Pretty sure top AI parts are not legally allowed to be sold to China:

U.S. officials order Nvidia to halt sales of top AI chips to China

Chip designer Nvidia Corp said on Wednesday that U.S. officials told it to stop exporting two top computing chips for artificial intelligence work to China, a move that could cripple Chinese firms' ability to carry out advanced work like image recognition and hamper Nvidia's business in the country.

www.reuters.com

H100 parts are the hot item right now. NVidia sells them for $30K each IIRC, and they are being sold on Ebay for more than that.

 

[USER8000]

Last I heard they were buying every TSMC wafer they could get their hands on to build data centre/AI chips. That's why the revenue is going through the roof. Right now every wafer Nvidia has can be turned into AI chips and sold with huge profit margins. It's also shows why they want high profit margins for gaming - the gaming division is competing with the data center division for wafer allocation so they've gotta make it look like they will make decent money.

A few months ago they had reduced TSMC purchase commitments by $4.1 billion:

https://twitter.com/x/status/1640405109359378433

Not good timing at all then! They should have kept the gaming cards on samsung. They could have had their cake and ate it!