Trouble Ahead for This Chipmaker
Heavy is the head that wears the crown…
And a former market superstar has quite the crooked neck today.
As of 11:45 a.m., shares of Nvidia (NASDAQ: NVDA) were down roughly 14%. Get out your crash helmets and look out below!
HotHardWare.com reported Nvidia has lowered their revenue guidance.
The key takeaways from NVDA’s report as per their press release this morning include:
- Fourth quarter revenue expected to be $2.20 billion versus previous guidance of $2.70 billion
- Gaming and datacenter revenue below company’s expectations
- Management to discuss reported financial results on Feb. 14 earnings call.
That second bullet is a very important one. Here’s why.
NVDA’s Core Business Is Struggling
The big red flag for NVDA is decreased revenue from gaming.
Gaming and graphics processing units (GPUs) are NVDA’s bread and butter.
Failure there is a big problem. And as it stands today NVDA has little to fall back on to offset losses in this category.
Crypto prices are in the gutter and along with the fact that mining costs more than the value of the tokens being mined, this revenue stream could soon dry up completely.
And autonomous driving systems are not mainstream enough for NVDA to bank on entirely. As gaming sales go so too will NVDA shares.
That’s not to say NVDA can’t recover. But after speaking with trading expert Greg Guenthner this morning we’ve concluded shares could fall down to about $100 before any real resurgence happens.
Will NVDA’s Poor Guidance Hurt All the Semis?
NVDA’s report was a bit of a surprise. Especially after a number of strong reports last week from other big-name chipmakers.
As you can see in the chart below, the VanEck Vectors Semiconductor ETF (NYSE: SMH), for example, gained almost 6% through last Friday.
Today’s pullback hurt semiconductor shares across the board, but there’s still reason to believe a comeback is in order.
Especially given recent successful earnings from other major chipmakers.
We suggest looking to them instead while NVDA finds its footing again.
For Technology Profits Daily,
Chief Technology Expert, Technology Profits Daily