Earnings preview: Nvidia’s problems might not go away in Q1

Nvidia Corporation (NASDAQ: NVDA) is scheduled to report first quarter 2020 earnings results on Thursday, May 16. Wall Street expects earnings to decline over 61% to $0.79 per share and revenue to fall over 31% to $2.2 billion. Looking at the past four quarters, Nvidia has surpassed earnings estimates three times.

The first quarter results are expected to be hurt by a combination of post-crypto excess channel inventory and recent deteriorating end-market conditions. The company’s problems from last quarter have continued to the first quarter, namely the weakness in GPU demand and the US-China trade war.

Nvidia has been experiencing a softness in GPU demand for a quite a while and this is likely to hurt the top line and bottom line results for the first quarter. The ongoing trade tensions between the US and China are another issue. China is a large market for Nvidia and the difficulties caused by the trade war might affect sales.

Despite these difficulties, Nvidia might see growth from areas such as ray-tracing technology, which is already seeing good demand. This could bring optimism in an otherwise bleak scenario.

In the fourth quarter of 2019, Nvidia reported mixed results. Revenues fell 24% to $2.21 billion and missed Street estimates while adjusted EPS declined 53% to $0.80 but managed to top expectations.

For the first quarter of 2020, Nvidia has guided for revenues of $2.20 billion, plus or minus 2%, and gross margin of 58.8%, plus or minus 50 basis points.

Nvidia’s shares have gained over 19% so far this year. The stock was down 5% in afternoon trade on Monday.

Browse through our earnings calendar and get all scheduled earnings announcements, analyst/investor conference and much more!