Nvidia share price falls on downbeat China sales outlook

Chip manufacturer Nvidia had a day before reported revenue above Wall Street expectations, but said it expects a steep drop in fourth-quarter sales in China – a key revenue generator – in the wake of new US rules.

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Nvidia forecast adjusted gross margins of 75.5% for the fourth quarter, above analyst estimates of 72.64%. Nvidia forecast current-quarter revenue of $20 billion, plus or minus 2%.

Nvidia is set to take a hit from the vastly expanded US export controls on what the company can sell to China. Sales of the affected chips made up nearly a quarter of Nvidia’s datacenter sales in the past few quarters, Reuters reported.

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“Export controls will have a negative effect on our China business, and we do not have good visibility into the magnitude of that impact even over the long term,” Chief Financial Officer Colette Kress said.

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The company’s adjusted third-quarter revenue tripled to $18.12 billion, beating estimates of $16.18 billion. Excluding items, the company earned $4.02 per share as against expectations of $3.37 a share, Reuters reported.

Nvidia shares have jumped more than 240% this year and are up over 13% in the past one month.

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(With inputs from Reuters)

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Updated: 23 Nov 2023, 08:39 AM IST