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Nvidia Corp.’s data center business in the second quarter was one of the bright spots.
Advances in artificial intelligence powered Nvidia Corp.’s data center business in the second quarter as revenues swelled to $3.8 billion, up 61 percent from the same period one year ago, the Santa Clara, Calif.-based global technology company reported Wednesday.
It was among the few bright spots in the company’s fiscal Q2 2023, which ended July 31, as Chief Financial Officer Colette Kress acknowledged “it was a challenging quarter.”
Kress told investors that the company implemented programs with its gaming channel partners to adjust pricing and price position high-end desktop GPUs as the company prepares to debut a new CPU.
“As OEM and channel partners reduce inventory levels to align with current levels of demand and prepare for our new product generation, we expect that decline to be partially offset by sequential growth in data center and automotive revenue” she said. Second-quarter revenue in the automotove business was $220 million, up 45 percent from a year ago and up 59 percent from the previous quarter.
“Our first strategy is to reduce selling in the next couple of quarters to correct channel inventory,” she said. “We’ve also instituted programs to price position our current products to prepare for next generation products.”
The chipmaker had warned earlier this month that its quarterly sales would be off target. At the time, Nvidia said the miss primarily reflected weaker-than-expected gaming revenue.
Kress said the company expected gaming revenue to decline sequentially.
Total revenue in Q2 fell 19 percent to $6.7 billion compared to the previous quarter and 3 percent year-over year and short of expectations. Non-GAAP earnings per diluted share were $0.51, down 51 percent from a year ago and down 63 percent from the previous quarter. Non-GAAP net income was $1.29 billion.
CEO Jensen Huang closed the conference call by noting while navigating supply chain transitions have been challenging, the fundamentals of the business are strong.
“We’ll get through this over the next few months and go into next year with our new architecture,” he said.
Nvidia stock fell 4 percent after hours, following a 0.2 percent rise in the regular session to close at $172.22.