![]() ![]() The stock moved sharply higher in the months leading up to the second quarter earnings report when the data center was the largest contributor to revenue. In fact, data center growth has been slowing consistently since the second quarter of 2021, while gaming growth has been accelerating. That seems to come as a disappointment since some of the big growth in the stock has come on the premise of Nvidia's positioning for data center growth. Nvidia also danced around commentary in the conference call when asked where most of the revenue growth would come in the first quarter, noting that the majority of the revenue growth would come from gaming and not from the datacenter. However, the company also noted that the increased expense in the quarter was due to the Mellanox acquisition and a longer workweek in the fourth quarter. This was rather similar to what was seen in AMD's fourth-quarter results, resulting in AMD's stock falling sharply since. It could be suggested that the company doesn't have the pricing power needed to overcome many of its costs. It seems surprising that the company was unable to drive higher margins in the quarter. Overall, gross margin expansion has been minimal in recent quarters, going back to the fiscal third quarter of 2020. Meanwhile, the company is guiding fiscal first-quarter margins to 66% at the midpoint of the range, up slightly from 65.8% a year ago. The company reported non-GAAP gross margins of 65.5% flat on a sequential basis and up just 10 bps on a y/y basis. Additionally, the company noted in its guidance that the fiscal first quarter was expected to see roughly in line margins too. It's not surprising given the company's inability to see a form of meaningful margin expansion in the latest quarter. ![]() Nvidia ( NASDAQ: NVDA) shares are falling following their latest round of quarterly results. ![]()
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