NVIDIA Corporation (NASDAQ:NVDA) will be easily the most important earnings report to hit this week. You thought earnings season for big cap tech was over? Nope. One big one left.
Naturally, with the AAPL and LITE news out today, and the broad weakness we have seen in the market following the Fed’s adjustment of its language to assume deteriorating corporate capital investment, the stock has taken a bit of a hit. The tech cycle is contracting in terms of expectations for premium ideas, and NVDA fits into that schema.
NVIDIA Corporation (NASDAQ:NVDA), however, is also something potentially poised for monstrous upside if the company hits the ground running with earnings after Thursday’s closing bell.
So, what are investors expecting? We would assume one of the main points will be about how well the new line of GeForce RTX video cards is selling, especially since there are some indications that the launch has been rockier than what the company hoped for.
Looking to refresh its gaming segment (~60% of revenue), NVIDIA presented its new ray-tracing video cards in late August. In addition to offering a modest to moderate performance boost over the GTX1000 series, the RTX2000 series introduced ray-tracing technology, which allows content creators to develop more life-like images and video.
However, gamers have yet to see the impact of ray tracing due to a software-related bottleneck. NVIDIA’s RTX GPUs became available for sale at the end of September, but even the latest game releases do not yet support ray tracing or deep learning super sampling, which is another new technology introduced in the RTX line. It is believed that the features are being held back by the delayed release of Microsoft’s October 2018 update for Windows 10.
The delay in unlocking NVIDIA’s new technology has been well-publicized, suggesting some users may have put off their purchase plans as they see little reason to pay a premium for technology that has yet to be enabled. Granted, the issue with Microsoft’s Windows update is likely to be resolved in the near future, but it should not be a surprise if NVIDIA acknowledges that early demand for its latest product was impacted negatively.
In any case, we would expect the tape to be thick into and out of the play off the print. And, right now, given the expanding drama around big cap tech guidance, the vulnerability is likely more on the shorts than the longs.
NVIDIA Corporation (NASDAQ:NVDA) operates as a visual computing company worldwide. It operates through two segments, GPU and Tegra Processor.
The market tends, rightly or wrongly, to see the company as in a competitive battle for market share in the GPU space with AMD, though each has been seeing seemingly unrestrained top-line growth over recent years.
The company’s GPU segment offers processors, which include GeForce for PC gaming and mainstream PCs; GeForce NOW for cloud-based game-streaming service; Quadro for design professionals working in computer-aided design, video editing, special effects, and other creative applications; Tesla for AI utilizing deep learning, accelerated computing, and general purpose computing; GRID provides power of NVIDIA graphics through the cloud and datacenters; DGX for AI scientists, researchers, and developers; and cryptocurrency-specific graphics processing units.
The Tegra Processor segment provides processors designed to enable branded platforms – DRIVE and SHIELD; DRIVE automotive computers and software stacks, which offer self-driving capabilities; SHIELD devices and services designed for mobile-cloud in home entertainment, AI, and gaming applications; and Jetson TX 2, an AI computing platform for embedded use.
The company’s products are used in gaming, professional visualization, datacenter, and automotive markets. NVIDIA Corporation sells its products to original equipment manufacturers, original device manufacturers, system builders, add-in board manufacturers, retailers/distributors, Internet and cloud service providers, automotive manufacturers and tier-1 automotive suppliers, mapping companies, start-ups, and other ecosystem participants.