Tech stock under pressure: NVIDIA Corporation (NASDAQ: NVDA)

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NVIDIA Corporation (NASDAQ: NVDA) stock fell over 2.3% in the pre market session on 17th August, 2018 (as of 9:00 AM GMT-4; Source: Google finance) after the company said cryptocurrency-fueled demand had dried up and it expects sales below the market expectation, overshadowing quarterly results that has beaten analysts’ expectations. NVDA for the second quarter, reported 89 percent growth in the net income to $1.1 billion.

NVIDIA

NVDA in the second quarter of FY 18 has reported the adjusted earnings per share of $1.94, beating the analysts’ estimates for the adjusted earnings per share of $1.66, according to Thomson Reuters. The company had reported the adjusted revenue growth of 39.9 percent to $3.12 billion in the second quarter of FY 18, beating the analysts’ estimates for revenue of $3.10 billion.  Nvidia’s largest and oldest business of selling graphical processing units, or GPUs, for video game players beat analyst estimates, bringing in $1.8 billion compared with estimates of $1.75 billion, according to data from FactSet.

Analysts had braced for lower gaming chip sales because Nvidia is widely expected to unveil a new generation of gaming chips ahead of the holiday shopping seasons, possibly as soon as next week. Gamers typically hold off on purchasing chips when new models are just around the corner.

For the third quarter, it is projected the revenue to be of $3.25 billion, plus or minus 2 percent, falling short of analyst estimates of $3.34 billion, according to Thomson Reuters.

The analysts are bearish by Nvidia’s gross margin forecast of 62.8 percent, which is slightly below the analysts’ expectations of 62.9 percent and also due to a result of putting more memory modules on its chips. Analyst KinNgai Chan of Summit Insights Group said Nvidia shares were likely to trade lower as analysts reset their expectations around slower growth rates.

Nvidia’s largest and oldest business of selling graphical processing units, or GPUs, for video game players beat analyst estimates, bringing in $1.8 billion compared with estimates of $1.75 billion, according to data from FactSet.

Analysts had braced for lower gaming chip sales because Nvidia is widely expected to unveil a new generation of gaming chips ahead of the holiday shopping seasons, possibly as soon as next week. Gamers typically hold off on purchasing chips when new models are just around the corner.

Meanwhile, the cryptocurrency news and the lower-than-expected forecast clouded an otherwise strong quarter, including Nvidia’s sales of chips to data centers, where companies such as Amazon.com Amazon Web Services, Microsoft Corp’s Azure as well as Alphabet Inc Google Cloud are buying up the chip to power artificial intelligence and other functions.

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