What Is NVIDIA, How Does It Make Money and Should You Invest?
NVIDIA's Q1 revenue was $8.3 billion, motivated by record revenues in its gaming division, before it saw a slight drop in Q2.
Software company Nvidia reported $8.3 billion in Q1 revenue, ahead of market expectations, and primarily driven by its gaming sector. Still, the company saw shares fall by about 10% on Wednesday, partly due to investors announcing weaker revenues expected for the current quarter.
Like many technology and software companies, Nvidia saw exponential revenue growth during the pandemic as demand for electronics and gaming rose — with the release of its RX 30 Series being its "best gaming product cycle ever." However, as demand has plateaued, gaming was surpassed by its data center revenue for the first time with an 83% year-over-year increase.
And yet, the software giant still saw a drop in overall revenue, falling to $8.1 billion for Q2.
What is Nvidia?
Nvidia Corporation is an American multinational technology company. It is a global leader in artificial intelligence software and has an increasing presence in the gaming industry. In 2020, it acquired British software design company Arm for $40 billion in stock and cash, before dropping the acquisition in early 2022 due to regulatory hurdles.
Why did Nvidia stock fall?
Nvidia CEO Jensen Huang said that the company was facing a "challenging macro environment" in a statement.
The company attributed market loss to the conflict in Russia and Ukraine, along with lockdowns in China — stating the combined forces had a $500 million impact on revenue.
Nvidia also said it expected gaming revenue to decline specifically "in the teens" in the current quarter.
Related: Can Nvidia Bounce Back
What does it mean for Nvidia investors?
While Nvidia saw a drop in revenue for the second quarter, the company is still seeing high demand for its graphics processing units that are used for gaming and artificial intelligence.
Similarly, the company's data center — which sells chips for cloud computing companies and enterprises, grew by 83% annually to $3.75 billion.
Nvidia also announced a $15 billion buyback program through the end of 2023.
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