Nvidia Isn’t Out of the Game as Near-Term Headwinds Don’t Discourage Our Positive Long-Term Outlook

Wide-moat Nvidia reported second-quarter results consistent with its preliminary results announced on Aug. 8, with revenue of $6.7 billion well short of the original guidance of $8.1 billion. The primary driver of the shortfall was weakness in the gaming segment (down 44% sequentially and 33% year over year to $2 billion). We had been anticipating a slowdown in the gaming segment following the crash in cryptocurrency prices and associated mining demand as well as weaker macroeconomic conditions. Shares fell about 5% during after-hours trading, which we attribute to weak guidance as gaming revenue is likely to be depressed for at least a few more quarters.