NVDA Inventory Problems ????

An article today in SA https://seekingalpha.com/article/4182662-nvidia-appears-gpu-… raised the specter of earning shortfalls at NVDA because of underestimating the demand for lower end gaming GPU’s.

I have been away for a few days so this may have been discussed. In addition I do not know this author well. Not sure if he is a Citron type.

Regardless, if true it could have a short term impact on stock price. Would appreciate input and opinions.

Also posted on NPI.

well he is the Citron type at least
from bottom of article

Disclosure: I am/we are short NVDA.
So far have see no convincing arguments about why Nvidia decided to delay introduction of new gaming GPU. Possibly if they were lots better they would compete with Nvidia’s upper end more profitable GPU, but many other explanations are possible . The real facts will leak out eventually/

you have it reversed - article says “Nvidia has overestimated pent-up gaming demand and underestimated the impact of declining mining demand.”
but he is a bear, as usual talking up his case

Do a Google searc on inventory problem. Same thing stated in 2016 that caused the stock to fall well below $100 into the $90s. I bought a ton at that point. Inventory problem turned out to be false, despite expensive brokerage having make the call.

This time the inventory call is even less credible (does not mean it will be less wrong however) and is based upon a theory that the drop in cryptocurrency (11% of revenues last quarter - and already given in guidance to fall 2/3rds next quarter) will not be replaced by pent up graphic gaming customers. Citing a 300,000 unit buy back from one distributor by Nvidia. That would be ~ $180 million buy back in a $3 billion plus quarter in revenues. Or 5% or less of total revenues.

It is a total non-issue for any investing horizon others than a few weeks. It would be a blessing to long term investors if the market drove the stock down again because of this irrelevancy. As such it probably will not. In 2016, when the stock was driven down on a wrong call in regard Nvidia was not the absolute dominant force that it is now, and gaming wa a much larger portion of the business, and data center growth had just started to tornado.

Nvidia has projected a 2/3 drop in cryptocurrency. So cryptocurrency will fall to $92 million next quarter from forward guidance from over $280 million. That does not leave a whole heck of a lot of room for some catastrophic channel oversupply issue to be all that material. Particularly if there was any pent up demand at all from gamers.

The one concern, and again this would be irrelevant looking out just one or two quarters is if pent up demand was capped in anticipation of a new graphic chip coming out this fall. And the press has provided multiple clues from suppliers and removed language at a presentation Nvidia is giving, that such a chip is coming out this fall. This fall is not that far off.

That is basically the issue. Less credible than last time this call was made, little room for catastrophic damage anyways given forward guidance, but there is the chance that anticipation for a new graphics chip this fall could defer some card purchases into the fall.



anticipation for a new graphics chip this fall could defer some card purchases into the fall. definitely it was the case for me, I was planning to buy a new gaming lap top after new chips were released. From a gamer’s point view I have to decide if I want wait indefinitely. , because my state has a sales tax holiday weekend next month. The present top end chips play all the games. I do believe him about a “long time” so I will buy then, rather than delay longer.

From a investors point of view I have already discounted the end of cryptocurrency demand.
Profit wise I think some minor drop in low end GPU chips is unimportant, that is not where you find the big bucks.

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