Nvidia has an excess of GPUs as PC graphics card demand falls.
Nvidia presented a preliminary earnings report Monday to caution investors about revenue shortfalls. In the May-July fiscal quarter; gaming-focused revenues were $2 billion; down 44% sequentially and 33% year over year.
Nvidia’s quarterly revenue will be $6.7 billion, down from $8.1 billion. The business blames a “lower sell-in of gaming products reflecting a reduction in channel partner sales” The economic crisis causes merchants to stop ordering GPUs.
Nvidia reduced sell-in and developed price plans with channel partners to reflect tough market conditions.
Late 2020 and 2021 saw the biggest GPU shortage in history; leading to rising costs. Huge demand from customers and cryptocurrency miners; plus chip manufacturing and supply chain issues during the COVID-19 pandemic, precipitated the scenario.
In the months since, GPU demand has dropped while supplies have improved. Retailers have overstocked GPUs; according to Nvidia’s early earnings report. The company would also take a $1.3 billion charge “primarily for inventory and related reserves, based on revised expectations of future demand.”
Nvidia CEO Jensen Huang remarked in the results report; “Our gaming product sell-through projections declined significantly.” We adjusted channel prices and inventories with our gaming partners as we expect macroeconomic conditions to effect sell-through.
Nvidia GPU price drops are good news for consumers. EVGA has slashed RTX 3090 Ti graphics card prices by $600 to $800.
Nvidia will introduce next-gen graphics cards this year. So the company may price future GPUs lower to attract buyers.