After Nvidia earnings, could the semiconductor giant landscape change?

2022-06-16 0 By

Nvidia reported a record high revenue and profit, but the acquisition of ARM failed negative sentiment is still digested, coupled with AMD’s recent successful acquisition of Turing, the future of the semiconductor giant pattern will face new challenges.Nvidia (NVDA), the world’s largest maker of graphics and AI chips, released its Q4 results after the market closed on February 16.Nvidia’s revenue rose 53% year-over-year to a record high of $7.64 billion in the fourth quarter of fiscal 2022. Analysts expected $7.42 billion, up 8% from q3.Adjusted EPS was $1.32 a share, also above expectations of $1.22, up 69% year-over-year and 13% month-over-month.Adjusted gross margin of 67 per cent was in line with the company’s official guidance and slightly below analysts’ expectations of 67.1 per cent.Nvidia’s Q4 beat both revenue and earnings expectations, setting a new high in revenue, marking its seventh consecutive quarter of revenue beating expectations and its 12th consecutive quarter of earnings beating expectations, respectively.In terms of business, Nvidia is mainly divided into four business segments: gaming, data center, professional visualization, and automotive.Games grew 37% year-over-year and 6% month-on-month to a new high of $3.42bn, in line with expectations of $3.4bn.Games accounted for less than 45% of total revenue, down from 50% in the fourth quarter of last year.Data center revenue rose 71 per cent year on year and 11 per cent quarter on quarter to a record $3.26bn, in line with expectations of $3.2bn and up from 55 per cent year-over-year growth last quarter, accelerating for the second consecutive quarter.Nvidia CEO Jen-Hsun Huang said the company’s data center growth is being driven by several factors, including hyperscale data centers, public clouds, enterprise core clouds and enterprise edge clouds, all of which are growing.The quarterly and full-year year-over-year growth in gaming revenue reflects higher GeForce GPU sales, as both gaming and data center businesses continue to benefit from strong demand for Nvidia’s Ampere architecture products, according to the company.Quarterly revenue at the professional visualization division rose 109 per cent year on year and 11 per cent quarter on quarter to a record $643m, but that was slower than the 144 per cent year-on-year growth in the previous quarter.However, automotive revenue fell 14% year-over-year and 7% month-over-month to $125 million.Nvidia has established a multi-year partnership with JAGUAR Land Rover to jointly develop and deliver next-generation autonomous driving systems, as well as ai-enabled services and experiences, according to the earnings report.Gaming, data center, and professional visualization all recorded record quarterly and fiscal revenue, and data center revenue exceeded $2 billion for the fourth consecutive quarter.It also means that data centers will be the new engine of future growth for Nvidia.It’s worth noting that despite the stellar results, the market wasn’t too impressed.Shares swung between gains and losses after the earnings release, falling more than 3% at one point.Because of the earlier nvidia abandoned the acquisition of ARM events.Nvidia said it expects GAAP operating expenses to rise to $3.55 billion and non-GAAP operating expenses to $1.6 billion in the next quarter due to its February 8 decision to abandon its acquisition of British chip designer ARM from SoftBank in the face of “significant regulatory challenges.”Non-gaap gross margin remained at 67%.ARM is a company specializing in chip design and development based on RISC technology. Currently, a total of 30 semiconductor companies have signed licensing agreements with ARM for the use of hardware technology. More than 95% of smartphones and tablets around the world use ARM architecture.ARM’s acquisition is likely to raise concerns about monopoly among handset makers.Nvidia’s failure to buy ARM means the loss of a powerful enabler in the chip business.On September 13, 2020, Nvidia, the world’s no. 1 GPU, announced that it would acquire Arm, a leading Chip design company of Japan’s SoftBank Group, for $40 billion.Just a month and a half later, AMD, the world’s number two GPU maker, announced an all-stock acquisition of Silas, the world’s largest FPGA maker, in a deal valued at an estimated $35bn.But the two deals ended very differently. Nvidia decided on February 8, 2022 to abandon its acquisition of British chip designer ARM from SoftBank in the face of “significant regulatory challenges” and will pay a $1.36 billion “break fee,” while AMD successfully acquired Cyrx on February 14.This will give it a new driver in AI cloud computing, edge computing and other markets, which will become a new challenge for Nvidia to defend the market.According to Gartner, nvidia ranks ninth and AMD tenth among the world’s top 10 semiconductor suppliers in 2021. However, due to two acquisitions, the industry is facing a shake-up in the future.Nvidia shares are down about 40% since hitting an all-time high in November 2021, much of that decline coming from the failed ARM acquisition.But as the bad constantly out, right now the share price has reached a price range.Major agencies have updated their ratings on Nvidia.Rosenblatt, Piper Sandle, Bernstein and others have ‘overweight’ ratings and raised their price targets.Mizuho raised its $335 price target to $345.Risk tip: by Russia and Ukraine geopolitical tensions and federal Reserve officials once again put “eagle” impact, stocks have shock risk.