In a moment of candid reflection, Nvidia CEO Jensen Huang told investors on Monday that the fourth quarter "was a real punch in the gut" due to lower than expected GPU sales, including certain high-end graphics cards based on Nvidia's new Turing architecture.
Nvidia now expects to report $2.2 billion (opens in new tab) in fourth quarter revenue when it adds up the final tally, versus its previous guidance of $2.7 billion. The company placed part of the blame on deteriorating macroeconomic conditions, particularly in China, which it said impacted consumer demand for gaming GPUs.
It wasn't hard to see this coming. Nvidia saw a boost in GPU demand during the cryptocurrency mining boom, and while that was going on, midrange and high-end graphics cards were in short supply to gamers/consumers. When the crypto-market crashed, however, the opposite was true—Nvidia was left with excess inventory of its previous generation Pascal cards.
Nvidia had hoped that Turing would bolster its GPU sales, pinning its hopes on gamers being enamored with the added performance and especially the feature upgrades, such as real-time ray tracing support and DLSS capabilities. For various reasons, though, Nvidia's RTX cards have not met Nvidia's sales expectations.
"These products deliver a revolutionary leap in performance and innovation with real-time ray tracing and AI, but some customers may have delayed their purchase while waiting for lower price points and further demonstrations of RTX technology in actual games," Nvidia said.
Indeed, Nvidia's RTX cards debuted at significantly higher price points than Pascal, when comparing model numbers. More recently, Nvidia added the GeForce RTX 2060 to the mix, which is the "first Turing GPU for the mass market," priced at $349. It's not clear how many Turing cards Nvidia has sold in total, though any sales of the GeForce RTX 2060 would not be reflected in its fourth quarter earnings.
Nevertheless, while "Q4 was an extraordinary, unusually turbulent, and disappointing quarter," Nvidia is confident in the foundation of its business, which it said is "strong and more evident than ever."
"[Nvidia] is resilient, creative, and repeatedly rises to great challenges. We will shake this off and come back strong," Jensen said (PDF) (opens in new tab).