Inflation killed the Nvidia starWhen the chips are down, it looks like positive earnings reports mean nada.
- NVDA slid more than 6% in extended trading despite topping its Q1 earnings report with EPS of $1.36 on revenues that were up an impressive 46% to reach a record-breaking $8.29bn. Chip sales to computing cloud companies managed to outperform Nvidia’s gaming business, up 83% YoY to $3.75bn.
- What did Nvidia do next? Well, if its earnings report was one of its shiny microchips, it basically brandished that to investors, only to then shove it into a toaster like a pop tart. The company lowered its revenue estimates for Q2, now around $400m short of Wall St. expectations, while also admitting it is slowing down its hiring to curb costs.
- Nvidia’s outlook is one of a “challenging macroeconomic environment”, thanks to high inflation. With NVDA already down 43% since the start of the year, investors will be hoping to see the stock bottom out soon.
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The SEC eyes crypto gainsTurns out Nvidia has been keeping its crypto gainz far too low-key for the SEC, which hands the chipmaker a hefty fine.
- Nvidia will have to pay $5.5m as part of a settlement with the Securities and Exchange Commission, which says that the company failed to appropriately inform their investors about how crypto miners were fuelling heightened demand for its graphics cards. The stock lost around 1% on Friday, but is sitting at its lowest point since July.
- The drama goes all the way back to 2017, when Nvidia supposedly failed to say that crypto mining was responsible for a 52% uptick in its gaming segment – the SEC says investors should have known their profits were dependent on such a volatile market.
- Nvidia has sidestepped the concerns by creating its very own crypto mining chip, and added software that made its graphics cards impossible to use for mining – however, said chips aren’t actually doing very well, seeing sales revenue decline to $24m in its latest quarter from $266m in Q2 last year.
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Nvidia says the magic $1tn wordsChip makers managed to bring out the bulls despite fighting in Eastern Europe threatening supplies.
🔍 Key points:
- Nvidia got analysts excited with its investor-day presentation, where the chipmaker said that its exploration of the datacenter, automotive, and gaming markets offer a $1tn opportunity – and what investor doesn’t like the word “trillion”?
- Intel added to the optimistic view of semiconductor stocks. Its CEO appeared on Capitol Hill on Wednesday to argue that government subsidies for domestic manufacturing would boost national security and address the global chip shortage.
- Nvidia led the gains with a nearly 10% jump on Thursday, and Intel saw its biggest one day gain in over a year with a 7% increase. At the same time though, the invasion of Ukraine could derail production of neon (a key gas ingredient for semiconductors), threatening supply chains even further.
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Analysts are chipper about the futureNvidia gets a boost from Wells Fargo, who thinks the stock has a future despite its Arm disappointment – but can the UK chip designer say the same?
🔍 Key points:
- Nvidia shares popped nearly 7% on Wednesday to hit a one-month high after Wells Fargo analyst Christopher Harvey added the stock to its “Signature Picks” list.
- Harvey thinks the chipmaker provides a great risk/reward opportunity and he expects a bunch of exciting developments from Nvidia’s upcoming investor day that would bring in some very big profits – he gave the company a $370 price target, a premium of over 50% on Wednesday’s close of $244.
- But British chip designer Arm isn’t feeling so hot after Nvidia’s $50bn takeover failed to get regulatory approval, and is having to cut up to 1,000 jobs as it prepares to possibly be taken public by Softbank.
Griffin Wooldridge / Unsplash
Another day, another hackThe online world is becoming a battleground of its own, with Nvidia and Samsung becoming the latest corporations to be hacked.
🔍 Key points:
- Hacker group Lapsus$ got access to hundreds of gigabytes of proprietary Nvidia data last week after sending out a phishing email, handing the chip maker some v niche demands – they wanted Nvidia to open source its GPU drivers forever and remove its Ethereum cryptocurrency mining nerf from its GPUs.
- But Nvidia made no moves to meet the threats. Now, the hackers have leaked the credentials of what they claim to be more than 71k Nvidia employees online and say that it's in discussions with someone who wants to buy the company’s source code for $1m.
- And Samsung has now been hit too, with what is suspected to be the same group of hackers releasing almost 190GB of confidential data and code from various Samsung projects.
Illustration by TradingView
Tough crowdNvidia smashes its first earnings since abandoning its Arm deal, but gets a meek reception from a market that has mile high expectations for the chip giant.
- Nvidia easily topped on both ends in its Q4 report with EPS that had jumped 69% y-o-y to $1.32, on top of revenue that was up 53% y-o-y to hit $7.64bn. It also delivered a guidance beat as the cherry on top, forecasting $8.1bn in the current quarter despite ongoing supply shortages.
- Its data center sales are popping off atm, seeing growth of 71% in the quarter to hit $3.26bn in sales. It comes as more cloud providers and tech companies like Meta (FB) turn to its GPUs to power their foray into artificial intelligence and the Metaverse – a trend that’s unlikely to slow down anytime soon.
- Despite all that, prices dropped 8% in Thursday morning trading. Given the stock is trading at 49x its projected profit, expectations for the chip giant are through the roof and a solid earnings may not be enough to wow. CEO Jensen Huang said himself: “We all have to recognize that the market size, our market footprint, is much larger than it used to be.”
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The Arms race comes to an endAfter finding the regulatory gun power too much to conquer, Nvidia officially officially abandons its acquisition of chip firm Arm.
- Nvidia has officially given up its $66bn Arm takeover, which would have marked the biggest semiconductor deal in history – it’ll also have to pay Softbank $1.25bn for not going through with the transaction.
- The deal faced nonstop backlash from regulators in the U.K., U.S., E.U., and China; so instead of selling to Nvidia, Softbank is planning on taking Arm public in 2023.
- On the plus side, Nvidia is enjoying some bullish momentum after a bunch of chipmakers released positive earnings last week and led to a few analyst upgrades – Nvidia’s share price has been edging up and it’s now worth even more than Meta with a $618bn market cap.
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Is Nvidia planning on throwing in the towel?A source told Bloomberg that Nvidia is sick of all the regulatory battles and is thinking about lifting its Arm to wave the white flag – but it seems investors are still willing to fight.
- The stock is trading at a three-month low after sinking 4.5% on Tuesday and seeing last week’s tech rout wipe 13% off prices for its worst week since March 2020.
- It’s apparently getting ready to dump its attempted $40bn Arm acquisition, according to Bloomberg's secret sources, who say Nvidia told its partners to not expect the deal to close.
- It's contending with severe anti-competition concerns from regulators in the U.S., U.K., Europe, and China; as well as from its competitors and popular figures like Elon Musk.
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Nvidia wants to kill the sparkNvidia is tired of Arm wrestling with regulators, arguing that U.K. has got its love goggles on.
- Nvidia takes on the U.K.’s CMA, who are considering blocking its $40bn Arm takeover, arguing that their concerns are “romanticizing” Arm’s history and current market power.
- The deal is set to miss its original deadline of March 2022 thanks to unconquered antitrust concerns from the U.S., Europe, and China.
- BofA still thinks Nvidia is a “top pick” in the semiconductor field for 2022, predicting growth of up to 30% this year and gains of nearly $100 for its stock price.
Jakub Skafiriak / Unsplash
Nvidia is losing its grip“The largest semiconductor chip merger in history” is one step closer to crumbling after U.S. regulators pile on.
- The FTC has sued to block Nvidia’s $40bn takeover of British chip designer Arm, saying the merger will “stifle competing next-generation technologies.”
- Regulatory clouds have been gathering since the deal was announced in September 2020. The E.U. are taking their time with approval, China remains a hurdle, and the U.K. is also investigating.
- Analysts and investors have pretty much written off the deal, saying it's now looking “highly unlikely” to go through.
Illustration by TradingView
Nvidia wakes up from its napNvidia rebounds as the Omicron drama dies down just long enough for investors to focus on Friday’s analyst upgrade.
- The stock was up nearly 6% on Monday after a new Covid strain gave the term “Black Friday” a new meaning last week and sent prices sinking.
- The drama overshadowed bullish coverage from BofA, which doubled down on its $381 price target and suggested that the persisting chip shortage would will mean solid demand and strong pricing power.
- Its CEO has big ideas for the future, with plans in motion to use its tech to build AI avatars for the real and meta worlds.
Luis Vasconcelos / Unsplash
Another investigation to the pileStrong earnings may be strengthening the share price, but trouble is brewing on yet another continent for Nvidia’s embattled Arm takeover.
- Nvidia ended Friday up 4%, adding to Thursday’s earnings-induced gains of 8%.
- But the U.S.'s FTC wants to ruin the fun. Nvidia confirmed that the regulator has joined the list of those concerned about the $40bn takeover – the EU and U.K. have already launched investigations, and China is looking into the deal.
- The deal won’t go through unless given clearance from all four countries, which is looking less and less likely.
Chip Chip HoorayInvestors are feeling chipper after Nvidia’s Q3 earnings come in sunnier than expected, building on this year's 120% gains.
- Nvidia easily beat on both ends with revenue of $7.10bn and EPS of $1.17, sending shares up 5% afterhours.
- Data center sales were the star of the show, up 55% to $2.9bn after deals with big dogs like Amazon’s (AMZN) AWS, Google (GOOGL) Cloud, and Microsoft's (MSFT) Azure.
- Gaming leveled up, with sales jumping 42% to $3.2bn thanks to demand for its GeForce GPUs.
- It wants to be at the forefront of the Metaverse. November’s 15% gains were partly driven by a bunch of new AI product releases last week to help developers build the Metaverse, which has gotten crazy hype since Meta’s rebrand.
- It’s still wrestling with its Arm deal, but investors aren’t too concerned with prices reaching new highs even as the U.K. and EU open investigations.
- Guidance of $7.4bn beat expectations, and analysts have been raising price targets all over the place on Metaverse excitement.
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The UK probes awayNvidia gets dealt yet another blow regarding its acquisition of the U.K.’s biggest tech company.
- U.K. ministers are poised to launch an investigation into Nvidia’s $40 billion takeover of Arm – the worry is that the merger will give the pair a monopoly over the chip industry.
- The EU recently launched its own in-depth probe into the acquisition, adding to a long list of opposition to the deal.
- The deal won’t go through unless given clearance from both regulators, which is looking less likely as time goes on.
Illustration by TradingView
Nvidia chips away at the bearsChip-maker Nvidia gets a price hike along with its six-day winning streak as another winner of the Meta rebrand.
💝 Nvidia got handed an upgrade and a $320 price target from Wells Fargo, which said that its OmniVerse network will play a big role in Meta’s metaverse mission.
📈 Shares shot up 12% to close at a new high and top a $700 million valuation for the first time ever.
🔦 Meta’s new focus has shone a spotlight on VR, and Nvidia’s virtual network is likely to get a lot of attention as Meta grows its vision.
Pop to the topMove over Mr Buffet – a record month sees Nvidia push past Berkshire Hathaway (BRK.A) to become the seventh-biggest company in the US.
• Highs of $267.84 on Wednesday gave it a market cap of over $660bn.
• The stock is up over 100% this year due to heightened chip demand, compared to 40% for Berkshire Hathaway.
• Investors are keen to share the love from external events like Meta’s (FB) dive into AI.
Another investigation to add to the pileThe European Commission has launched an “in-depth investigation” into Nvidia’s Arm acquisition, making investors' dreams of approval seem very far away.
Nvidia’s proposed $40 billion acquisition of U.K. chip designer Arm faces yet another setback when the executive arm of the EU, the European Commission, officially launches an in-depth investigation into the deal that could last months. After offering a number of concessions to the deal, the regulator decided there wasn't enough evidence that the merger wouldn’t cause higher prices, less choice and reduced innovation. EU competition chief Margrethe Vestager said in a statement:
Whilst Arm and Nvidia do not directly compete, Arm's IP is an important input in products competing with those of Nvidia, for example in datacentres, automotive and in Internet of Things. Our analysis shows that the acquisition of Arm by Nvidia could lead to restricted or degraded access to Arm's IP, with distortive effects in many markets where semiconductors are used.
Britain's competition regulator is also investigating the deal on antitrust grounds. Nvidia lost just over 1% on Wednesday.
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A new chip feeds the bullsA new crypto mining chip release last week fed the bulls’ hopes that Nvidia is overcoming the battle between miners and gamers, leading to bullish coverage and a 2% lift on Monday.
Nvidia’s new crypto mining monster GPU chip went on sale earlier this week in an effort to take miners' attention away from its GeForce graphics cards that are meant for gamers who are getting grumpy about sharing the tech amid a global shortage. Increased mining demand has been making an impact on Nvidia’s business and chip availability, so the new release got analysts hopeful that things will soon improve for the chipmaker. Investment bank Piper Sandler lifted their price target on the stock from $225 to $260, a premium of 10% on Nvidia’s closing price, saying:
For Nvidia specifically, the impact of cryptocurrency on the gaming business has been a hang-up for some investors. If the decoupling does occur, we feel the gaming GPUs will be able to meet true gaming demand, instead of potentially being allocated to cryptomining.
Nvidia ended the day up just under 2% on the news.
Nvidia’s new crypto chipNvidia feeds hungry crypto miners with a new $4,300 chip.
Nvidia’s new crypto mining monster GPU chip goes on sale for a whopping $4,300, after being released in an effort to take miners' attention away from its GeForce graphics cards that are meant for gamers who are getting grumpy about sharing the tech amid a global shortage.
Nvidia popped to its highest price ever at $231.30 on Friday before closing the day up 0.15%.
Nvidia races to keep up with the gameNvidia saw its prices pop just under 3% on Thursday after releasing an update to its cloud gaming platform on its cloud gaming platform GeForce NOW, which it last updated just one month ago.
The gaming world is a competitive one, not just among gamers themselves but also among the tech giants that supply them. Early last year, chip-maker Nvidia launched its cloud gaming platform GeForce NOW, but in an effort to keep its spot at the top the company has just given the platform a facelift, only one month after the last one. For $200 a year, gamers get access to servers powered by Nvidia’s most powerful chip, giving its fans access to "the most powerful gaming supercomputer ever built”. Nvidia founder and CEO Jensen Huang said:
While we continue to drive the most advanced gaming technology with GeForce RTX, we have dedicated the past decade to refining and expanding GeForce NOW cloud gaming to bring the best gaming platform to anyone with a computer. I am thrilled to announce our second-generation GeForce NOW SuperPOD — it’s a giant leap forward.
Prices popped in the first hour of Thursday trading and closed up 2.66%.
Nvidia gets shot down for the last timeIn a bid to gain EU approval for its controversial $54 billion takeover of British chip designer Arm, Nvidia last week offered the competition regulator a number of concessions to the deal that it hopes will swing things their way. Reports are rolling in, however, that the concessions weren’t quite good enough to satisfy the agency, which is expected to begin a probe into the acquisition that could last up to four months. This would be the deal’s second major setback amid a cloud of disapproval from people like Elon Musk, after the U.K.’s competition watchdog raised serious concerns about Nvidia’s proposed takeover
Tech team-upNvidia and Microsoft (MSFT) have partnered up to build what they claim is the world’s largest and most powerful AI language processor – the Megatron-Turing Natural Language Generation model. The pair claim that the language processor can boast unmatched accuracy in a wide range of tasks like reading comprehension, natural language reference and commonsense reasoning, writing:
The quality and results that we have obtained today are a big step forward in the journey towards unlocking the full promise of AI in natural language. The innovations of DeepSpeed and Megatron-LM will benefit existing and future AI model development and make large AI models cheaper and faster to train. We look forward to how MT-NLG will shape tomorrow’s products and motivate the community to push the boundaries of natural language processing (NLP) even further. The journey is long and far from complete, but we are excited by what is possible and what lies ahead.
Nvidia acquires Oski TechnologyNvidia, which already has an extensive range of products, has been focusing on further diversifying its business from graphics processing chips to data centres, cars, and networking. With that comes the growing importance of safety and notification verification – which is where Oski Technology comes in, an industry leader in formal verification that Nvidia has been working with for over a decade.
The terms of the deal weren’t disclosed, but prices lost 1.16% on the news.
Could the Arm deal finally be about to go through?After both governmental and commercial outcry against the deal, Nvidia’s $54 billion Arm takeover could be about to go through after the chip maker offered to make a number of concessions.
In a bid to gain EU approval for its controversial $54 billion takeover of British chip designer Arm, Nvidia has offered the competition regulator a number of concessions to the deal that it hopes will swing things their way. The specific concessions weren’t outlined, but it's safe to assume they will largely surround the issue of how Arm will remain a neutral player in the industry. The EU will now get feedback for the concessions from rivals and customers, and if everyone approves the deal could go through without any more obstacles. There’s also a chance that the EU will either ask for more concessions, or start a four-month long investigation into the deal, so investors are eagerly awaiting the October 27 update. Watch this space.
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Can Nvidia keep up?Nvidia dropped down 4.4% after a report was published saying that Intel has been one of the few that has managed to keep its GPU chips in supply during the pandemic and chip shortage – which competitors like Nvidia have not.
Nvidia ended Tuesday in the red along with the rest of the market, sinking 4.4% on the back of a new report that shines light on how its competitors have been keeping up with the global chip shortage. The crisis has made a huge impact on the whole market, but it seems some are managing it better than others – as a Game Rant report says:
While graphics cards have become near impossible to acquire during the pandemic, Intel has largely kept its cutting-edge CPUs in supply.
During the pandemic, Nvidia managed to take over a good portion of Intel’s (INTC) market share, but if this trend continues then Nvidia will have to up its game to keep up. Prices ended the day at $206.99.
Diego3336 / Wikimedia Commons
Semiconductors get a vote of confidenceA bullish take on the semiconductor market from Goldman Sachs sends Nvidia up 3.27%.
The semiconductor market has gotten a vote of confidence from Goldman Sachs, which predicts heightened demand and a bigger market for the U.S. semiconductor industry. According to recent data, chip sales grew 11% in 2020 and 17% this year so far, and the gains are expected to continue. Mario Morales, Group Vice President, Enabling Technologies and Semiconductors at IDC, writes:
The semiconductor content story is intact and not only does it benefit the semiconductor companies, but the unit volume growth in many of the markets that they serve will also continue to drive very good growth for the semiconductor market.
Based on the bullish data, on top of the prediction that the semiconductor shortage will ease in 2022, led Goldman Sachs to up its optimism on the market. Prices ended the day up 3.27%.
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The chip making market is still chillyNvidia gets handed two price upgrades, but the chip making market is chilly at the moment and the company is still in limbo with its $40 billion Arm takeover.
Nvidia has been trading horizontally since the end of August as the market continues to speculate over whether or not the automakers controversial $40 billion takeover of Arm will be allowed to go through. Despite heightened demand for graphics chips and two price hikes on Friday, the week closed down 2.57%. On Friday, BofA analyst Vivek Arya lifted their target from $260 to $275, and Truist Security analysts hiked their price from $230 to $257 after saying it remains the “best large cap growth idea”. Truist analysts said after a call with Nvidia CFO Colette Kress:
(While) do not believe NVDA made any new material disclosures, we gained incremental conviction on growth drivers in gaming, (reduced risk of crypto overhang), pro-viz, datacenter, and automotive.
Nvidia is expecting a ruling from the European Union regarding its Arm acquisition some time next month.
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Nvidia CEO steps into the spotlightNvidia is making a name for itself in the EV space, and it seems like its CEO is gaining a rep too.
Nvidia CEO Jensen Huang gets named as one of Time’s Top 100 most influential people.
NVIDIA Corporation / flickr
Intel pushes back with powerful new chipIntel’s upcoming gaming graphics card gets leaked, and the chip rivals Nvidia with its impressive power level, making people wonder if there could be a new chief in gaming town.
A leaked slide with info on Intel’s (INTC) upcoming chip release shows that its latest product will be as powerful as one of Nvidia's top selling cards, the Nvidia GeForce RTX 3070. Intel (INTC) seems to be targeting Nvidia’s customer range with its new release, taking on the mid-range price market, getting people wondering if the graphics card manufacturer could lose its market dominance.
Prices were down 1.45 % in Monday trading.
Further doubt cast on Nvidia/Arm dealNvidia applies for EU antitrust approval for its controversial Arm takeover, and in light of the global backlash the acquisition has received, the application could go either way.
Nvidia is seeking EU antitrust approval for its controversial $54 billion takeover of British chip designer Arm. Given the governmental and commercial outcry that has ensued since the deal was announced last year, it's likely that the application will run into a few hurdles. One official said:
It’s not certain the deal will get easily cleared here.
GPU chip availability is running on fumesIf recent rumors out of Asia hold true, the September supply of the latest Nvidia GPUs could be 30% lower than expected.
The global chip shortage rages on, and rumors out of Asia report that it's about to get even harder to get your hands on an Nvidia GPU chip – the September supply of the highly-coveted chips could be down by 30%.
Kristina Flour / Unsplash
Musk joins mounting opposition to Arm takeoverTesla’s Elon Musk joins the growing list of governments, regulators and corporate actors who have competition concerns over Nvidia’s hoped-for takeover of UK chip maker Arm.
The $40 billion takeover bid has faced a number of obstacles from U.S. and Chinese regulators, along with numerous high profile executives and companies all concerned over what the acquisition could do to the highly competitive marketplace for chips. Now, Elon Musk is allegedly also signalling opposition to the deal, which is likely to dramatically impact the chip industry by bringing together two acknowledged leaders. It's understandable that Musk might not want want such a powerful player having influence over supplies in the EV space. Amazon (AMZN) and Samsung are also both also said to have concerns over the deal.
Wedbush analyst Dan Ives weighed in this week with his two cents:
This deal would make a juggernaut. Now with Tesla in the chip game, Musk focused on it.
Nvidia stock remained largely unaffected, perhaps numb to opposition news by now, ending Monday up 0.23% to reach its highest price ever of $226.88.
Nvidia gets on the government payrollOne chip-makers loss is another’s gain – after an Intel delay, the U.S. The Department of Energy is leaning towards inking a deal for a supercomputer made with Nvidia chips.
Shares of chip manufacturer Nvidia ended the day up 3% after news hit that the U.S. The Department of Energy is nearing a deal to buy a supercomputer made with Nvidia and AMD (AMD) chips as the agency awaits a delayed supercomputer from Intel (INTC) called Aurora. The Nvidia/AMD (AMD) made machine will be called Polaris, and whilst it won’t replace the supercomputer that Intel (INTC) is creating (which is due to be the country’s fastest supercomputer), it will be the test dummy for software that the Department of Energy will apply to the Intel (INTC) computer. Intel (INTC), AMD (AMD) and Nvidia are all competing for a dominant market share of the chip-market, which is under huge strain at the moment, and winning a contract like this gives hope that the software will be passed down to commercial data centers in later years, boosting the business. Michael E. Papka, director at the facility heading up the project, said:
Beyond getting us ready for Aurora, Polaris will further provide a platform to experiment with the integration of supercomputers and large-scale experiment facilities, like the Advanced Photon Source.
Regulators strong Arm Nvidia into delaying its acquisitionAfter a series of obstacles, Nvidia admits that its $40 billion takeover of Arm is going to take longer than the 18 months it was expecting.
In September 2020, Nvidia announced that it would be acquiring Arm for $40 billion to create the world's first premier computing company for the age of AI – but since then, the deal has had to face obstacles from regulators in both the U.K. and China. The regulatory process was expected to take around 18 months, but Nvidia CEO Jensen Huang has admitted that the acquisition is unlikely to be completed in that time frame anymore as the company contends with the regulatory scrutiny.
Crypto chip sales holding Nvidia backNvidia releases banging second quarter earnings, beating on both the top and bottom lines, and only slightly overshadowed by a slowdown in its crypto currency chip sales.
GPU chip guru Nvidia released its Q2 earnings report after the bell on Wednesday, which saw its strong graphics card sales carry the company to a successful quarter – though it’s not all good news, and its crypto chip sales have taken from the crash that dominated most of the second quarter. The company reported earnings per share of $1.04 on revenue of $6.51 billion, compared to the $1.01 in earnings per share and $6.33 billion in revenue that analysts were expecting. The chip makers’ numbers were boosted by the global semiconductor chip shortage, which meant its goods were in strong demand and revenue was up 68% to a record high. Its graphic segment impressed analysts, reporting an increase of 87% in sales to $3.91 billion.
However, a dip in sales for the company’s cryptocurrency chip product, CMP, cast a shadow over the celebrations. Expected to hit around $400 million, sales actually came in at about $266 million. Going forward, Nvidia CFO Colette Kress said that the firm expects only a “minimal contribution” from its crypto chip sales.
Credit Suisse warns of coming volatilityNvidia slips over 3% in Monday morning trading after a Credit Suisse analyst voices concern over in-coming volatility in the wake of a slowdown in the crypto market.
Shares of Nvidia sank more than 3% in the first few hours of Monday morning trading before ending the day down 1.18% at $199.50. The dip came on the back of Credit Suisse analyst John Pitzer, who reiterated his outperform rating on the stock and posits that the stock will be affected by crypto mining regulation. The headwinds would damage Nvidia’s bottom line because of the company’s crypto mining graphics processing chips. Despite his $175 price target, which is lower than Nvidia has traded at in over two months, Pitzer is still bullish about the stock in the long-term.
Quick recovery after stock split dipShares opened down 75% on Tuesday after the top dog chip maker began trading on a four-for-one split adjusted basis. Not to worry though, prices closed down less than 1% at the end of the day.
Nvidia, which has been one of the few firms to come out of the global chip shortage laughing, has seen the pandemic take its shares up from a March 2020 low of $180.68 to a high of $835 at the beginning of July. Prices returned back to around those pre-pandemic levels on Tuesday after initiating a four-for-one stock split. Nvidia announced the stock split late in May as a part of a plan to make its stock more accessible and appealing to investors and employees.
The stock closed at $750.19 on Monday before the split and had a market cap of just under $468 billion. Existing shareholders pocketed a dividend of three more shares, so it’s not really a big deal for them – in fact, there was some excitement leading into the split, and prices lifted 3.41% on Monday. But the new price of $186.12 is much more enticing to those who wanted to hop on the Nvidia train but couldn't afford the price tag, while lower prices can also lead to more pin action because of option contracts, making the company attractive as a longer term investment.
Could China derail Arm deal?Nvidia is hoping to avoid delays with its $40 billion takeover of Arm, but is struggling to get past Chinese regulators.
Nvidia has reportedly submitted an application to Chinese competition regulators seeking approval for its takeover of the UK chip designer, Arm – one of the biggest tech deals in history, valued at $40 billion. The application will kick off a period of scrutiny that could take up to 18 months, which means the deal will close later than the company expected when it announced the merge. And what a nerve-wracking 18 months it’ll be. China is a giant market for Arm, with sales in the country hitting around $500 million in 2019. There’s every possibility that China will join the list of countries and corporations opposing the deal, which could send everything spiralling.
The news halted the upwards climb of Nvidia stock, which has been rising steadily over the past couple of weeks on expectations.
Happy timesThere have been a lot of casualties from the global semiconductor crisis, but one company that has come out laughing is Nvidia – whose latest earnings show revenue jumping 84% thanks to gamers and their demand for graphics chips.
Nvidia reported first quarter earnings that saw a serious year-on-year jump in revenue and beat expectations on both earnings and sales. The company reported earnings per share of $3.66 on revenues of $5.66 billion, compared to expectations of $3.28 in earnings per share on $5.41 in revenue.
The chip maker's earnings covered a period of exponential growth in its business and industry, accompanied by a dramatic shortage of chips around the world - demand for gaming and cloud computing skyrocketed during the pandemic, as did demand for chips in crypto mining. Nvidia’s graphics segment, which consists mostly of its graphics cards, saw an increase of 81% to $3.45 million in revenue, and its gaming products were up over 100% to $2.76 billion in sales.
We had a fantastic quarter, with strong demand for our products driving record revenue. Our Data Center business continues to expand, as the world’s industries take up NVIDIA AI to process computer vision, conversational AI, natural language understanding and recommender systems. Across industries, the adoption of NVIDIA computing platforms is accelerating,
said Jensen Huang, founder and CEO of Nvidia.
Nvidia takes sides in the Crypto/Gamer battleThe battle for chips (the semiconductor kind, not the tasty snack) between cryptobulls and videogamers is heating up: and this week Nvidia took sides, placing a limiter on more of its graphic cards to prevent crypto mining. Prices initially dropped but rebounded later in the day.
Nvidia has a dedicated gamer customer base, but many of them are struggling to get hold of the company’s newest graphic card because all of its chips are being bought up and used for cryptocurrency mining. Nvidia has made its feelings clear on this, making a moves to ease the current shortage. The company first acted earlier this year, when it began to limit how efficiently one of its graphics cards, the RTX 3060, could process Ethereum transactions; and it announced on Tuesday that it would start limiting almost all of its chips, including the ones that are used by the most serious gamers.
We believe this additional step will get more GeForce cards at better prices into the hands of gamers everywhere
the company said in a statement.
However, crypto miners don’t need panic just yet, because earlier this year Nvidia announced a new product just for them – a cryptocurrency mining processor (CMP), specifically designed for crypto mining on the Ethereum network.
Video gaming cards are more easily adaptable for Ether mining than Bitcoin, and the Ethereum network makes up around 90% of crypto rewards that can be won on repurposed video game chips. Though it’s currently the second largest cryptocurrency, Ether’s value has soared this year and its gains have outpaced the OG Bitcoin. In fact, because Bitcoin’s volume is limited to 21 million, there are far fewer tokens left to be mined, making Ethereum a more profitable long-term road for Nvidia’s chips.
Separating these two avenues also means that Nvidia investors can rest a bit easier, hoping that there won't be a repeat of the company’s dismal fiscal 2019 performance, when a steep decline in cryptomining demand led to an excess in inventory, a decline in shipping rates, and a 24% drop in revenue. The latest move creates a bit more of a separation of power between the two worlds, which could provide some financial stability.
U.K. Govt weighs in on Nvidia/Arm dealThe U.K. government intervenes in Nvidia’s proposed $40 billion takeover of chip designer Arm on national security grounds, and prices dump almost 5%.
The U.K. government has officially begun a formal security investigation into Nvidia’s plans to takeover British chip designer Arm because it believes the deal could have national security implications. In September 2020, Nvidia announced that it would be acquiring Arm for $40 billion to create the world's first premier computing company for the age of AI. Oliver Dowden, the UK’s Culture Secretary, on April 19 said that he had written to the Competition and Markets Authority to instruct them to begin a “phase one” investigation to assess the transaction. It is expected that the regulator will have a report ready by the end of July with advice on issues relating to jurisdiction and competition, and a summary of national security concerns.
“Following careful consideration of the proposed takeover of Arm, I have today issued an intervention notice on national security grounds,” said Dowden. “We want to support our thriving UK tech industry and welcome foreign investment, but it is appropriate that we properly consider the national security implications of a transaction like this.”
Set up in the 1980s, Arm is famously referred to as the “Switzerland” of the chip industry thanks to its neutrality is licensing its designs to manufacturers around the world. However, the potential security issues arise from the fact that semiconductors underpin key defence-related technologies – and there are concerns that Arm could eventually raise prices or hurt licensing services to Nvidia’s competitors. Arm’s supposedly neutral position as a supplier within the chip industry has already raised questions around the acquisition because of Nvidia’s existing competition with Arm rivals such as Qualcomm and Intel.
But Nvidia (unsurprisingly) downplayed the issue. A spokesperson noted:
“We do not believe that this transaction poses any material national security issues. We will continue to work closely with the British authorities, as we have done since the announcement of this deal.”