NVIDIA Earnings Call Analysis: Channel Pains

NVIDIA Shares were down nearly 20% following a disappointing quarter and guidance. Through Amenity Viewer, we identified the underlying issues in just a few clicks, and found NVIDIA may not be the "masters at managing our channel" that they claimed in August.  

Please note: This in no way represents investment advice. All transcript text provided by S&P Global Market Intelligence.

NVIDIA: "Masters" of Their Domain?

As highlighted by the Key Drivers, a quick scroll through the insights in the Guidance and Cost-Price categories reveals the story:

"While channel inventory situation presents a near-term headwind, it does not change our long-term fundamentals."

"Although the cryptocurrency wave has ended, the channel has taken longer than expected to normalize."

"...between the unexpected, unanticipated slow decline of pricing in the channel and even after the prices came down, it took a little longer than we expected for volume to kick up.  And the other brand’s inventory in the marketplace, those factors kind of compounded and made it a lot worse than we expected."

Looking Back to Q2 for Answers

We look to the Q2 earnings call for more context, and find this issue was specifically addressed.

  • CJ Muse, Evercore ISI

"...as you think about your gaming guide, are you embedding any drawdown of channel inventory there?"

  • NVIDIA CEO

"We’re expecting the channel inventory to work itself out.  We are masters at managing our channel, and we understand the channel very well. As you know, the way that we go to market is through the channels around the world.  We’re not concerned about the channel inventory"

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Transcript text provided by S&P Global Market Intelligence. SEC Form 8-K  text provided by EDGAR Online. 

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