Yahoo Finance How Might Pascal’s Architecture Impact NVIDIA’s Fiscal 2Q17?
An In-Depth Exploration of NVIDIA's Fiscal 1Q17 Earnings
NVIDIA posts strong guidance for fiscal 2Q17
After beating analysts’ estimates in fiscal 1Q17, NVIDIA (NVDA) is set to report another quarter of better-than-expected revenue amid weakness in the overall semiconductor market, which forced Intel (INTC) to lower its 2Q16 guidance.
NVIDIA expects to outperform the semiconductor industry by supporting future trends with its new products. Let’s look at the company’s guidance for fiscal 2Q17 and what factors could drive its growth in the quarter.
Revenue guidance
For fiscal 2Q17, NVIDIA expects to post revenue in the range of $1.32 billion–$1.37 billion, higher than analysts’ consensus estimate of $1.28 billion and its fiscal 1Q17 revenue of $1.3 billion. Until now, the company’s growth was driven by its Maxwell architecture, built on TSMC’s (TSM) 28nm (nanometer) node.
The company has now launched its much-awaited Pascal architecture on TSMC’s 16nm FinFET (fin-shaped field effect transistor) technology and is believed to be two generations ahead of Maxwell. It expects its Pascal architecture to further boost growth in the gaming, data center, and VR (virtual reality) spaces.
Similar guidance has been reported by rival Advanced Micro Devices (AMD). It expects to report its first revenue rise in six quarters in 2Q16, driven by strong demand from gaming consoles and the launch of its Polaris GPU (graphics processing unit), which will compete with NVIDIA’s Pascal.
However, NVIDIA’s launch of Pascal before Polaris gives NVIDIA a first-mover advantage and may benefit its revenue growth, provided the technology proves to be a success.
Profit guidance
On a non-GAAP (generally accepted accounting principles) basis, NVIDIA expects its gross margin to be between 57.5% and 58.5% in fiscal 2Q17, slightly lower than its fiscal 1Q17 gross margin of 58.6%. The company expects to maintain its operating expenses at around $445 million in fiscal 2Q17.
The company also expects to set aside $30 million–$40 million for capital expenditures.
In the last part of the series, we’ll see how investors reacted to NVIDIA’s earnings and product launches. The iShares S&P 500 Growth ETF (IVW) invests in large-capitalization stocks listed on the S&P 500 Index. It has 0.20% exposure to NVDA and 0.64% to INTC.
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