News Nvidia 2Q22 Financial Results / The Impact of the Mining Crash

[Hitman928]

Nvidia has pre-announced (never a good thing) a glimpse of their upcoming earnings results for 2Q22 (cy). The mining crash has hit Nvidia hard and they are reporting $6.7B in revenue, down from their previously announced $8.1B of projected revenue for the quarter. The hit has mostly come from the "gaming" sector, Nvidia said (the quotes are my own, I think we all know it wasn't actually gaming). Nvidia also said that the challenging market conditions in the "gaming" sector are expected to continue into the 3rd quarter. Nvidia also announced that data center, while up, also fell short of the companies expectations due to supply chain issues. Their gross margin plummeted more than 20 pp down to 43.7% which Nvidia has blamed on long term purchase commitments they made before the unexpected softening of the "gaming" market. They do expect the gross margin hit to be short lived as they balance out supply with the demand.

https://finance.yahoo.com/news/nvidia-announces-preliminary-financial-results-130000607.html

This news confirms the stories that Nvidia has a major surplus of GPU stock it has to clear due to the mining crash, that they were much more exposed to the volatility of the mining market than AMD/Intel, and that they continue to try to hide this fact by blaming the gaming market for the abrupt weak demand.

 

[Saylick]

AMD is selling both CPUs and GPUs, where CPUs are the main source of income.
Nvidia is selling only GPUs.
So It's not very surprising that AMD will have higher revenue than Nvidia, even If It took a very long time.

Lol, I don't think it matters what AMD or Nvidia sell. It's not like selling CPUs guarantees financial success. The CPUs have to be competitive to sell. You make it sound like anyone who sells CPUs can make more money than Nvidia, which for the record doesn't just sell GPUs; they have a good chunk of revenue come from software as well, something AMD don't have.

 

[TESKATLIPOKA]

Lol, I don't think it matters what AMD or Nvidia sell. It's not like selling CPUs guarantees financial success. The CPUs have to be competitive to sell. You make it sound like anyone who sells CPUs can make more money than Nvidia, which for the record doesn't just sell GPUs; they have a good chunk of revenue come from software as well, something AMD don't have.

I think It matters what they sell, for example now when crypto is down, It hurts Nvidia's revenue more than AMD's, but at the beggining of crypto craze It helped Nvidia more than AMD.
I never said selling CPUs is a guarantee for financial success or anything like that, you just interpreted It that way.
I said AMD sells CPUs + GPUs and their main source of income is CPUs, Nvidia's main source of income is GPUs.
AMD's CPUs are now very competitive unlike in the past(Bulldozer), GPUs are also quite good, so It's not a surprise their revenue is increasing and now It actually surpasses Nvidia or will surpass.

 

[Vattila]

I said AMD sells CPUs + GPUs and their main source of income is CPUs, Nvidia's main source of income is GPUs.

That's true, but you have to consider what the company actually says, especially to financial analysts, about the size of their target markets. This is often expressed as TAM (total addressable market), and Nvidia has stated their TAM to be an astounding $1 trillion!

"This included NVIDIA’s presentation to investors, which plotted a total addressable market (TAM) of $1 trillion with software and hardware products in markets such as AI, enterprise automation, and autonomous vehicles" (Forbes)

AMD has been much more modest in their TAM estimates. Even after acquiring Xilinx and Pensando, their stated TAM at their recent Financial Analyst Day was no more than $135B currently, rising to $300B in the next five years.



It is also pretty clear that the market, as of today, expects Nvidia to have a much larger TAM opportunity than AMD, hence the almost three times larger valuation for Nvidia ($431B vs $150B market capitalisation).

With all this in mind, it is quite remarkable — especially from an investor's viewpoint — that AMD is now surpassing Nvidia's revenues!

Cryptocurrency was apparently a flabbergasting portion of Nvidia's revenues. It is good that they acknowledged some of it on the call yesterday. I just browsed their previous quarter's 10-Q filing, where it is prominently mentioned in sections "Risks", "Litigation" and "Segment information". In the latter, they state that systems for mining is even part of their Compute & Networking segment (hence may contribute to the flat outlook).

PS. For those who do not know, there is now a countdown to Ethereum's switch from mining to a new validation algorithm (proof-of-stake rather than proof-of-work), expected to be completed by the end of next month. This will most likely end large-scale mining using GPUs. See The Merge.

 

[jpiniero]

With all this in mind, it is quite remarkable — especially from an investor's viewpoint — that AMD is now surpassing Nvidia's revenues!

I guess the question is if this is temporary or not. From the forecast, the gaming revenue is not going to be that much in Q3. They are that overstuffed with Ampere.

 

[Saylick]

I guess the question is if this is temporary or not. From the forecast, the gaming revenue is not going to be that much in Q3. They are that overstuffed with Ampere.

They are telegraphing that their gaming revenue won't return to form until next year.

 

[jpiniero]

They are telegraphing that their gaming revenue won't return to form until next year.

I could see that, given that you might only see the 4090 in that timeframe. It might take that long to clear out Ampere too.

 

[BoomerD]

While the article doesn't specifically mention the crypto crash, it discuss nVidia's glut of "gaming cards."

(whoops...forgot the link)

Nvidia says it built too many GPUs — expect sales while it works on something ‘new’

Nvidia is giving retailers discounts on gaming GPUs

www.theverge.com

 

[Leeea]

Nvidia is selling only GPUs.

your statement is incorrect:

Introducing Grace

A CPU Purpose-Built for Servers Running Terabytes of Data

www.nvidia.com

Nvidia also has had a long history of making CPUs, starting with the Tegra series in 2008:

https://en.wikipedia.org/wiki/Tegra

Notably showing up in the Nintendo switch, which is still currently being sold.

In other words, Nvidia sells CPUs and GPU*s just like AMD does. It just has less success.


*every Playstation or Xbox is an AMD gpu sold. With consoles making up a larger segment of the market then pc gaming, AMD GPU sales are far higher then most PC oriented observers typically realize.

 

[Joe NYC]

I guess the question is if this is temporary or not. From the forecast, the gaming revenue is not going to be that much in Q3. They are that overstuffed with Ampere.

I think NVidia's revenue from desktop dGPU is at minimum level this quarter, probably the only things shipping at adequate rate are notebook dGPUs.

I think it is definitely temporary, and things will be nearly back to the (new) normal in Q1 2023.

We will see how the "new" normal of Q1 2023 compares to peak of the sugar high in Q1 2022.

 

[jpiniero]

I was thinking about it... nVidia should have had a plan to deal with the what-ifs if mining were to take a dump, if they were going to make purchase agreements with Samsung. Like a new SHIELD or something.

 

[maddie]

I think NVidia's revenue from desktop dGPU is at minimum level this quarter, probably the only things shipping at adequate rate are notebook dGPUs.

I think it is definitely temporary, and things will be nearly back to the (new) normal in Q1 2023.

We will see how the "new" normal of Q1 2023 compares to peek of the sugar high in Q1 2022.

"new" normal

Good phrase. I think it will be a lot lower than the past few years. A rough beast this way comes.

 

[JasonLD]

I was thinking about it... nVidia should have had a plan to deal with the what-ifs if mining were to take a dump, if they were going to make purchase agreements with Samsung. Like a new SHIELD or something.

It is always better to ride the wave and deal with inventory problems later than completely missing out on it.

 

[coercitiv]

It is always better to ride the wave and deal with inventory problems later than completely missing out on it.

In other words, their inventory problems are caused by chips and cash competing for storage space!

 

[jpiniero]

It is always better to ride the wave and deal with inventory problems later than completely missing out on it.

You could argue that nVidia has already lost multiple billions of dollars over this. That doesn't even really include the cost of having to delay Ada by 4+ months.

 

[amenx]

Nvidia now is in exactly the position I was hoping they would be one year ago: screwed with inventory in a mining-less environment close to the launch of a new gen.

 

[VirtualLarry]

Nvidia Halts Ampere Production to Keep Pricing High

By: Tom of Moore’s Law Is DeadEditing by: KarbinCryOn October 13th the RX 6600 launched at the price and availability levels leaked by Moore’s Law Is Dead (MLID) one week prior (https://youtu.be/eS6pYpOYZKs). This “almost an RTX 3060” was indeed widely in stock for hours on its launch day near...

www.mooreslawisdead.com

Remember this?

 

[VirtualLarry]

This news confirms the stories that Nvidia has a major surplus of GPU stock it has to clear due to the mining crash,

So, what kind of "sneaky tricks" are they going to pull, to sell their surplus of GA102 dies, besides just price-cuts?? Jayz video was one.

 

[Mopetar]

So, what kind of "sneaky tricks" are they going to pull, to sell their surplus of GA102 dies, besides just price-cuts?? Jayz video was one.

Pay enough people in a position to influence such things to keep ETH on proof of work for another two years.

 

[igor_kavinski]

Pay enough people in a position to influence such things to keep ETH on proof of work for another two years.

Let's keep this clean.


esquared
Anandtech Forum Director

 

[Saylick]

So Nvidia was sanctioned against selling A100 and H100 to China and Russia:

https://twitter.com/x/status/1565084597418729472

Nvidia stock down almost 4% in after hours trading. Yikes.

Edit:

“The license requirement also includes any future Nvidia integrated circuit achieving both peak performance and chip-to-chip I/O performance equal to or greater than thresholds that are roughly equivalent to the A100, as well as any system that includes those circuits”

 

[jpiniero]

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

Article says AMD's MI250 is also affected but AMD says the financial implications aren't much.

 

[Saylick]

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

Article says AMD's MI250 is also affected but AMD says the financial implications aren't much.

Not surprised considering the market that is impacted is server GPUs, of which AMD does not have a substantial market share at all. AMD loses out on the EPYC CPU sales for Nvidia systems that use AMD CPUs, but the demand for EPYC is so high that AMD would just sell them to someone else. Also, Nvidia's DGX or whatever is like 2 CPUs with 8 GPUs. Nvidia has far more to lose here than AMD.

I don't think Nvidia will hit guidance next quarter... This is $400 million of HPC GPU revenue lost for Nvidia. That's going to deeply cut their margins.

 

[Saylick]

Woooo dang, Nvidia stock price is getting massacred.

Jensen must be like this right now:

 

[amenx]

I dont think Nv have seen the worst of it. 6 months from now will likely be much worse.

 

[GodisanAtheist]

Edit: Also thank god Jensen does not have heat vision. "The more you WILL buy the more you WILL save"