Nvidia shares plunged 19% after reporting weak Q3 results

Nvidia stock fell by as much as 19% in extended hours trading on Thursday and continues to plunge on Friday after the company reported results for the third quarter of its 2019 fiscal year that fell short of analysts’ expectations.

The chipmaker reported revenue of $3.18bn, up 21% from $2.64bn in the year-ago period, yet the figures did not meet estimates from analysts who expected $3.24bn, according to Refinitiv.

That led to reported earnings of $1.84 per share, excluding certain items, versus $1.71 per share expected by analysts, according to Refinitiv. The third quarter figure was up 48% compared to the same period last year at $1.33.

The weaker than expected results were partially the result of the company's cryptocurrency mining products suffering a heavy decline in the second quarter, a trend which continued throughout the third.

“AI is advancing at an incredible pace across the world, driving record revenues for our datacenter platforms,” said Jensen Huang, founder and CEO of Nvidia. “Our introduction of Turing GPUs is a giant leap for computer graphics and AI, bringing the magic of real-time ray tracing to games and the biggest generational performance improvements we have ever delivered.

“Our near-term results reflect excess channel inventory post the crypto-currency boom, which will be corrected. Our market position and growth opportunities are stronger than ever. During the quarter, we launched new platforms to extend our architecture into new growth markets – RAPIDS for machine learning, RTX Server for film rendering, and the T4 Cloud GPU for hyperscale and cloud.”

Nvidia said it's expecting $2.70bn in revenue in the fiscal fourth quarter, excluding certain items. Nevertheless, Refinitiv has given a consensus estimate of $3.40bn, above the company’s forecast.

Russ Mould, AJ Bell investment director said: “The leading manufacturer of silicon chips has issued a big profit warning for the final quarter of its financial year (the three months to the end of January), citing indigestion in the video consoles market and also a slowdown in demand from makers of Bitcoin mining equipment.

“As a result, a stunning run of increases in quarterly sales and profits is about to come to a crashing end, with founder and chief executive Jensen Huang forecasting a 7% year-on-year drop in sales and a 28% year-on-year plunge in operating profit for the fourth quarter.”