The consistent decline in revenue expected by NVIDIA management this quarter caused the company’s stock price to drop by almost 7%, but at the same time acted as a catalyst for a couple of percent decline in the share price of rival AMD. The cessation of deliveries of products to the Russian market will have an impact on NVIDIA’s revenue, but it cannot be called catastrophic.
Image Source: NVIDIA
As already emphasized today, in the second quarter, NVIDIA expects to gain no more than $8.1 billion. The combined impact of the lockdowns in China and events in Ukraine will be expressed in the company’s loss of the opportunity to gain regarding $500 million in the second quarter. Of this amount, $100 million will fall on lost revenue from the supply of server components specifically to Russia, and $400 million will be distributed to the gaming segments of China and the Russian Federation in some ratio that is not disclosed.
However, if we proceed from the comments of CFO Colette Kress regarding the impact of the Russian market as a whole on NVIDIA’s total revenue, then historically the corresponding share did not exceed 2%. If we calculate the proportion of the $8.1 billion projected in the second quarter, then we get regarding $162 million in revenue lost specifically on the Russian market. Most of it, presumably, will fall on the server segment ($100 million), then regarding $62 million will go to the gaming segment. In fact, in this regard, NVIDIA will be more dependent on the Chinese market than on the Russian one.
At the same time, company representatives emphasize that lockdowns in China affect not only the ability of the company’s partners to produce NVIDIA products, but also domestic demand. The pandemic and self-isolation only at the first stages stimulated people to buy gaming solutions, now they are more concerned with purchasing essential goods. One way or another, NVIDIA expects that as the sanitary restrictions in China are lifted, the demand in the gaming segment will return to normal.
Colette Kress also added that Russia’s share of NVIDIA’s revenue in the gaming segment has historically slightly exceeded 2%. It can be assumed that in the medium term this type of business will suffer from the cessation of supplies of products to the Russian Federation more than the server business.
If you notice an error, select it with the mouse and press CTRL + ENTER.
