|From: Glenn Petersen||12/12/2018 7:16:44 PM|
|After losing half its value, Nvidia faces reckoning|
Danny Crichton @dannycrichton
December 12, 2018
Nvidia is a company that has reached the highest highs and the lowest lows, all in the span of a couple of weeks.
Over the past two months, Nvidia’s stock has dropped from a closing price of $289.36 on October 1 to today’s opening of $148.42, a decline of 48.8 percent.
It takes a lot for a company to lose nearly half its value in such a short period of time, but Nvidia is proving that an otherwise strong technology business can disappear in the blink of an eye. The company faces an almost perfect barrage of headwinds to its core products that is stalling its plans for long-term chip domination.
To step back a bit first though, Nvidia has traditionally made graphical processing units (GPUs) that are excellent at the kinds of parallel computation required for gaming and applications like computer-aided design (CAD). It’s a durable and repeatable business, and one that Nvidia has a commanding market share in.
Yet, these markets are also fairly narrow, and so Nvidia has endeavored over the past few years to expand its product offerings to encompass new applications like artificial intelligence / machine learning, autonomous automotive and crypto hashing. These applications all need strong parallelized processing, which Nvidia specializes in.
At least part of that story has worked well. Nvidia’s chips were extremely popular in the crypto run-up over the past few years, causing widespread shortages of the chips (and annoying its core gaming fans in the process).
This was huge for Nvidia. The company had revenues of $1.05 billion for the quarter ending October 31, 2013, and $1.31 billion two years later in 2015 — a fairly slow rate of growth as would be expected for a dominant player in a mature market. As the company expanded its horizons though, Nvidia engorged on growth in new applications like crypto, growing to $3.2 billion in revenue in its last reported quarter. As can be expected, the stock soared.
Now, Nvidia’s growth story is being hammered on multiple fronts. First and foremost, the huge sales of its chips into the crypto space have dried up as crypto prices have crashed in recent months. This is a pattern we are seeing with other companies, namely Bitmain, which has made specialized crypto chips a major part of its business but has lost an enormous amount of its momentum in the crypto bust. It announced it was shuttering its Israel office this week.
That bust is obvious in Nvidia’s revenues this year: they are essentially flat for three quarters now, hovering between $3.1 and $3.2 billion. Some have called this Nvidia’s “ crypto hangover.” But crypto is just one facet of the challenges that Nvidia faces.
When it comes to owning next-generation application workflows, Nvidia is facing robust competition from startups and established players who want access to this potentially gigantic market. Even its potential customers are competing with it. Facebook is reportedly designing its own chips, Apple has been doing so for years, Google has been in the game a while and Amazon is getting into the game fast. Nvidia has the know-how to compete, but these companies also understand the nuances of their applications really, really well. It’s a tough market position to be in.
If the challenges around applications weren’t enough, geopolitical tensions are also causing Nvidia serious harm. As Dan Strumpf and Wenxin Fan wrote in The Wall Street Journal two weeks ago in a deep dive, the company is emblematic of the challenge Silicon Valley firms face in the U.S. / China trade stand-off:
Nvidia executives are watching the trade fight with growing unease over whether it will curb its access to Chinese customers, according to a person familiar with the matter. Almost 20% of Nvidia’s $9.7 billion in revenue last year came from China. Many of its chips are used there for assembly into other products, and it has invested heavily to tap China’s burgeoning AI industries.Crypto, customers and China. That’s how you lose half your company’s value in two months.
The company also is concerned that deteriorating relations between the world’s two biggest economies are causing Beijing to double down on efforts to reduce reliance on U.S. suppliers of key hardware such as chips by nurturing homegrown competitors, eating into Nvidia’s long-term business.
Arman and I are still investigating the next-generation silicon space. Some good conversations the past few days with investors and supply-chain folks to learn more about this space. Nvidia’s analysis above is the tip of the iceberg. Have thoughts? Give me a ring: firstname.lastname@example.org.
This newsletter is written with the assistance of Arman Tabatabai from New York.
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|To: Glenn Petersen who wrote (1632)||12/12/2018 10:10:00 PM|
|For the most part, all of that bit of news already discounted in the price of the stock. As I've said before a lot of good stocks have taken 50% hits in price over the last few months and rightfully so. Softbank just announced they're unloading a sizable chunk of NVDA. Stock price did not budge. Facing a reckoning? I don't think so. Tell me something new I don't already know. Stock market crashing? It already has.|
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|From: JakeStraw||1/28/2019 9:53:47 AM|
|NVIDIA today updated its financial guidance for the fourth quarter of fiscal year 2019, reflecting weaker than forecasted sales of its Gaming and Datacenter platforms. |
In Gaming, NVIDIA's previous fourth-quarter guidance had embedded a sequential decline due to excess mid-range channel inventory following the crypto-currency boom. The reduction in that inventory and its impact on the business have proceeded largely inline with management's expectations. However, deteriorating macroeconomic conditions, particularly in China, impacted consumer demand for NVIDIA gaming GPUs. In addition, sales of certain high-end GPUs using NVIDIA's new Turing™ architecture were lower than expected. These products deliver a revolutionary leap in performance and innovation with real-time ray tracing and AI, but some customers may have delayed their purchase while waiting for lower price points and further demonstrations of RTX technology in actual games.
In Datacenter, revenue also came in short of expectations. A number of deals in the company's forecast did not close in the last month of the quarter as customers shifted to a more cautious approach. Despite these near-term headwinds, NVIDIA has a large and expanding addressable market opportunity in AI and high performance computing, and the company believes its competitive position is intact.
"Q4 was an extraordinary, unusually turbulent, and disappointing quarter," said Jensen Huang, founder and CEO of NVIDIA. "Looking forward, we are confident in our strategies and growth drivers.
"The foundation of our business is strong and more evident than ever – the accelerated computing model NVIDIA pioneered is the best path forward to serve the world's insatiable computing needs. The markets we are creating – gaming, design, HPC, AI and autonomous vehicles – are important, growing and will be very large. We have excellent strategic positions in all of them," he said.
NVIDIA expects its GAAP and non-GAAP gross margin to be impacted by approximately $120 million in charges for excess DRAM and other components associated with the updated revenue guidance and current market conditions.
The company will provide Q4 fiscal 2019 financial results and Q1 fiscal 2020 guidance on its earnings call scheduled for Feb. 14.
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|From: Glenn Petersen||2/6/2019 10:36:37 AM|
|SoftBank's investment fund dumps entire $3.6 billion stake in Nvidia|
Elizabeth Schulze | @eschulze9
- SoftBank's Vision Fund said it sold its entire stake in chipmaker Nvidia in January.
- The position was valued at $3.6 billion as of December 31.
- Nvidia cut its revenue guidance last week citing weakness in China.
Published 3 Hours Ago Updated 59 Mins Ago CNBC.com
Rick Wilking | Reuters
Jensen Huang, CEO of Nvidia, shows the NVIDIA Volta GPU computing platform at his keynote address at CES in Las Vegas, January 7, 2018.
Chipmaker Nvidia suffered another setback Wednesday after SoftBank's Vision Fund disclosed it had sold its entire stake, worth more than $3 billion, in the company in January.
In its third-quarter earnings release on Wednesday, SoftBank said its fund, which invests in technology ventures, had "disposed its entire holding of Nvidia shares." The position was valued at $3.63 billion as of December 31.
The disclosure is another blow for Silicon Valley-based Nvidia, which has seen its share price nearly slashed in half in the past four months. Last week, Nvidia cut its revenue guidance for the fiscal fourth quarter citing "deteriorating macroeconomic conditions, particularly in China."
Nvidia is part of a growing list of chip stocks warning about weakness in the world's second largest economy, as well as global demand for smartphones. In January, Apple issued a rare cut in its revenue guidance citing weak demand from Chinese consumers.
SoftBank's Vision Fund revealed its investment in Nvidia in May 2017. The Vision Fund, which is backed by investments from SoftBank as well as Saudi Arabia's sovereign wealth fund, launched in 2017 with more than $90 billion in capital. Its other investments include Uber Technologies, WeWork and British chip designer ARM.
SoftBank shares closed slightly higher on Wednesday after the firm reported a 60 percent rise in quarterly profits and a $5.5 billion share buyback program.
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|From: Glenn Petersen||2/15/2019 9:46:13 AM|
|Nvidia jumps after beating on earnings and revenue|
Jordan Novet | @jordannovet
- The company beat expectations on the top and bottom lines after providing updated guidance last month.
- Nvidia's recent inventory issues appear to have worsened sentiment in the company supply chain.
Published 18 Hours Ago Updated 13 Hours Ago CNBC.com
Shares of chipmaker Nvidia rose as much as 8 percent on Thursday after the company reported better-than-expected earnings for the fourth quarter of its 2019 fiscal year.
Here are the key numbers:
Revenue was down 24 percent year over year in the quarter, which ended on Jan. 27, according to a statement.
- Earnings: 80 cents per share, excluding certain items, vs. 75 cents per share as expected by analysts, according to Refinitiv.
- Revenue: $2.21 billion, vs. $2.20 billion as expected by analysts, according to Refinitiv.
Nvidia shares are up 15 percent since the beginning of the year, but in the past year the stock is down 36 percent.
"This was a turbulent close to what had been a great year," Nvidia CEO Jensen Huang said in the company's press release. "The combination of post-crypto excess channel inventory and recent deteriorating end-market conditions drove a disappointing quarter."
The company disclosed excess inventory one quarter ago. On Jan. 28, Nvidia released updated fiscal fourth-quarter guidance indicating that gaming and data center revenue were below the company's expectations.
"Hyperscale and cloud purchases declined both sequentially and year-on-year as several customers paused at the end of the year," Nvidia's chief financial officer, Colette Kress, said on a conference call with analysts on Thursday. "We believe the pause is temporary."
The largest cloud providers, like Amazon and Microsoft, already offer Nvidia graphics processing units (GPUs) that can be used to train artificial-intelligence models using lots of data. Now Nvidia is working closely with such companies on adoption of its GPUs for inference, a later stage in the AI process, Kress said.
Analysts from Raymond James said sentiment from the supply chain turned more negative.
"Gaming sales naturally continue to be impacted by the significant inventory overhang," the analysts wrote in a Jan. 28 note. "That inventory reduction has been impacted by slower sell-through, particularly in China."
In the fiscal fourth quarter Nvidia announced the availability of the GeForce RTX 2060 graphics card for PC gaming.
With respect to guidance, Nvidia said it's expecting $2.20 billion in revenue, plus or minus 2 percent, in the first quarter of its 2020 fiscal year. The midpoint is below the $2.28 billion Refinitiv estimate, and it would reflect a revenue decline of 31 percent.
The company believes fiscal year 2020 revenue will be "flat to down slightly." Analysts polled by Refinitiv were expecting a 7 percent revenue decline for that period. Kress said Nvidia expects the fiscal first quarter to be the bottom of the excess inventory issue for gaming GPUs.
Jim Kelleher, an analyst at Argus research, described Nvidia's situation as a "near-perfect storm," because of higher inventory, the launch of an expensive product and "a one-time runoff in crypto-related inventory." Kelleher has a buy rating on Nvidia.
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|From: idol breaker||2/21/2019 1:24:33 PM|
|Not a pretty picture-Nvidia plays the diversification game|
But takes its eye of its core business
The chip-design business is enjoying a “golden age”, declared John Hennessy and David Patterson, two gurus of computer design, earlier this month (Mr Hennessy chairs Alphabet, Google’s parent company). The shift to cloud computing, the rise of specialised computing tasks such as artificial intelligence (ai) and the slow death of Moore’s Law have conspired to create a growing market for “accelerator” chips designed to speed up drastically certain common types of calculation.
One of the standard-bearers for this trend is Nvidia, an American firm that makes graphics-processing units (gpus), customised chips designed to produce the demanding visuals in modern video games. Those chips, it turns out, are also well-suited to the sorts of calculations needed by everything from complex climate simulations to machine learning. Tweaked versions of Nvidia’s gpus can now be found in supercomputers, data-centres and cars. Excitement about such opportunities helped propel the firm’s share price to a peak of $289 in October.
Since then its shares have tumbled. On February 14th the firm reported dire quarterly results. Revenues had fallen by 24% from the same period last year, and profits by 49%. Jensen Huang, Nvidia’s founder and boss, described it as “a turbulent close to what had been a great year”.
Despite its ambitions to diversify, Nvidia still makes most of its $11.7bn of annual revenues from selling chips to gamers (see chart). And it was the firm’s gaming division that posted the biggest slump, with revenue falling by 45% in the latest quarter compared with the year before. Nvidia’s gaming numbers include money it makes from selling gpus to cryptocurrency miners, a bubble that has recently burst. But that is not the whole story.
The firm’s newest “Turing” chips, which support an advanced graphics technique called ray-tracing, have sold slowly. Ray-tracing gives more realistic lighting but requires huge amounts of computing power. For that reason it has not generally been used in games. Only a handful of big titles currently support it. Even without ray-tracing, the chips offer decent performance improvements over the firm’s previous products. But Nvidia’s chips are also generally faster than those from amd, its only significant competitor in gaming, and that has encouraged it to raise prices (Turing graphics cards can cost $1,500). Charging big sums for a modest improvement has, unsurprisingly, proved tough.
Nvidia’s terrible quarter will probably prove to be a blip. The firm expects revenues to recover next year. All but one of the non-gaming divisions grew in 2018. As cloud computing grows and ai becomes more prevalent, demand for Nvidia’s products will increase. But it faces growing competition. Bigger chipmakers such as Intel are eyeing similar markets. Many of Nvidia’s potential clients, including Google and Microsoft, are entering the chip-design business themselves. Facebook announced an ai chip on February 18th. Navigating all that will require much of Mr Huang’s attention. So will keeping his core customers happy.
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