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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. 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."
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.
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:
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.
Revenue was down 24 percent year over year in the quarter, which ended on Jan. 27, according to a statement.
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.
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.
Nvidia offers bid for Israeli chip firm Mellanox: report
Reuters March 10, 2019
TEL AVIV (Reuters) - Nvidia Corp has submitted an offer to buy Israeli chip designer Mellanox, the Calcalist financial news website said on Sunday.
Nvidia is competing for Mellanox with Intel Corp, which has already offered $6 billion for the Israeli company, Calcalist said. It cited estimates that Nvidia would pay at least 10 percent more than the price offered by Intel.
Nvidia’s advantage is that it would have a greater chance of obtaining U.S. and Chinese regulatory approval as Intel and Mellanox control the market for InfiniBand technology, a networking communications standard commonly used in supercomputers, Calcalist said.
Mellanox, which makes chips and other hardware for data center servers that power cloud computing, said it does not comment on rumors or speculation. Officials at Nvidia could not be reached for comment outside of regular U.S. business hours.
Intel has declined to comment on reports that it is seeking to acquire Mellanox.
Nvidia Corp. is bringing artificial intelligence to the edge of the network with the launch early Monday of its new Nvidia EGX platform that can perceive, understand and act on data in real time without sending it to the cloud or a data center first.
Delivering AI to edge devices such as smartphones, sensors and factory machines is the next step in the technology’s evolutionary progress. The earliest AI algorithms were so complex that they could be processed only on powerful machines running in cloud data centers, and that means sending lots of information across the network. But this is undesirable because it requires lots of bandwidth and results in higher latencies, which makes “real-time” AI something less than that.
What companies really want is AI to be performed where the data itself is created, be it at manufacturing facilities, retail stores or warehouses. And it’s a problem that several tech firms have attempted to address, most recently Intel Corp. with the launch of its first 10-nanometer “Ice Lake” chips today but also dozens of startups.
But Nvidia’s entrance into the AI edge is notable because the company’s graphics processing units are widely regarded as some of the best AI-processing hardware around. That includes its Tesla V100 for deep learning, and its Quadro GV100, which enables ray tracing, the process of creating realistic images, to be done in real time.
The new NVIDIA EGX platform is scalable from a light server based on the Jetson Nano processor that performs 0.5 Trillion operations per second in a few watts, to a micro data center with a rack of NVIDIA T4 based edge servers that can do 10,000 trillion operations per second. The energy-saving capabilities of the chip are important for AI, since traditional hardware is a massive power hog when running such tasks.
In a media briefing, Justin Boitano, senior director of enterprise and edge computing at Nvidia, said there will be huge demand for a platform such as NGX because there will be something like 150 billion machine sensors and “internet of things” devices in the world by 2025. He said many of these sensors would be used for initiatives such as “smart cities,” and will be pumping out data that needs to be processed onsite, for reasons such as a demand for lower latency, real-time response, data sovereignty rules or privacy concerns.
“AI is really the killer application in all industries both in vision and in speech,” Boitano said.
Partnerships are important as well if people are actually going to put those chips to good use. For that reason Nvidia is integrating the NVIDIA Edge Stack software than runs on EGX with Red Hat Inc.’s OpenShift Kubernetes container orchestration platform in order to make it compatible with modern software applications.
The platform also integrates security, storage and networking technologies from Mellanox Technologies Ltd., which is a company that Nvidia intends to acquire by the end of year for a cool $6.9 billion.
“Mellanox Smart NICs and switches provide the ideal I/O connectivity for data access that scale from the edge to hyperscale data centers,” said Mellanox Chief Technology Officer Michael Kagan.
Nvidia is teaming up with no fewer than 13 different server makers to sell the EGX platform, including big-name manufacturers such as Cisco Systems Inc., Dell-EMC, Hewlett Packard Enterprise Co. and Lenovo Group Holding Ltd.
NGX is also compatible with AI applications running on major cloud infrastructure services such as Amazon Web Services and Microsoft Azure, and can connect to IoT services such as AWS IoT Greengrass and Azure IoT Edge.