Nvidia (NASDAQ:NVDA) posted Q2 results last week that signals a turnaround is in the works. And although the stock is far from the $200 share price, its earnings report is a good start.
Nvidia reported non-GAAP earnings of $1.24 (GAAP EPS of $0.90). Revenue fell 17.3% to $2.58 billion. The company’s inventory drop is a key number that investors should notice:
"Inventory at the end of the quarter was $1.20 billion, down from $1.43 billion in the prior quarter and up from $1.09 billion a year earlier. Outstanding inventory purchase obligations at the end of the quarter were $757 million, down from $782 million in the prior quarter. DSI at quarter-end was 106 days, down from 140 days in the prior quarter and up from 86 days a year earlier."
Source: Nvidia
Nvidia’s inventories are normalizing, so it will help support product pricing and profit margins. The sell-through is an indication to investors that the Super RTX card refresh is resonating with customers. The cryptocurrency breakdown last year ended, with older model GPUs no longer weighting on the channels.
Gaming revenue was $1.31 billion, up 24% Q/Q and down 27% Y/Y. Datacenter revenue of $655 million is up 3% Q/Q and down 14% Y/Y. The automotive segment generated revenue of $209 million, easily beating the $177.9 million consensus numbers. The uptick in gross margin at 60.1% is a positive development that indicates the company faces no real pricing pressure from competitors like AMD (NASDAQ:AMD).
Your Takeaway
The GPU segment has clear long-term growth prospects driven by the AI revolution. Strong demand for gaming GPUs will sustain the division while AI and autonomous driving technology demands will lead to long-term revenue growth.
