NVIDIA Forecast: Zacks Downgrades Expectations Amid Gaming Sector Losses

In an unexpected move, NVIDIA Corporation (NVDA) has announced that its fiscal quarter results will likely fall short of expectations, primarily due to losses in the gaming sector. The company attributed this decline to decreased chip demand, which is expected to result in a significant decrease in direct sales of gaming products.

According to recent data from April 2022, global semiconductor sales reached a staggering $50.92 billion. Meanwhile, data center revenues could reach $3,810 million, representing a 61% year-over-year (YoY) increase. The automotive sector is also expected to see an increase of 45% YoY, reaching $220 million.

Despite this positive news in other sectors, management has announced disappointing results for the current fiscal quarter, citing losses in the gaming sector as the primary cause. Gaming-related revenues are projected to decline by -44% quarter-over-quarter (QoQ) and -33% year-over-year (YoY), resulting in an EPS of $2.04 billion.

NVIDIA's impressive track record of exceeding expectations is a notable exception, having done so 18 times out of the last 19 reports. However, analysts have revised their estimates downward, with 0 upward revisions and 8 downward revisions in the last 60 days.

The company's P/E ratio stands at 44.53, while its PEG ratio is 3.41. For this upcoming report, EPS of $0.59 is expected, which would represent a growth of -43.27% YoY compared to $0.89 in the same quarter last year. Zacks has downgraded NVIDIA's position to #4 (Sell) in the Top 29% (#74/252) of the Semiconductor-General industry.

The company's shares have underperformed the broader market, with a decline of -42.1%, compared to the USA500's -11.0%. As NVIDIA is scheduled to report its fiscal quarter-end July 2022 earnings results this Wednesday, August 24, after the market close, investors will be closely watching the company's performance.

As a multinational giant and world leader in visual technologies such as GPU graphics cards and integrated circuit technologies for computers and video games, NVIDIA has a significant impact on the industry. With a capitalization of $446.23 billion, the company is well-positioned to navigate the challenges it faces in the current market.

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