Shares of Nvidia Corp. were tumbling more than 5% in morning trading Monday. The company expects fiscal second-quarter revenue of $6.7 billion. Nvidia expects to report $2.04 billion in gaming revenue, down 44% sequentially and off 33% from a year before.

The company also anticipates $3.81 billion in data-center revenue, up 1% sequentially and 61% ahead of what the company posted a year earlier. The shortfall relative to the May revenue outlook of $8.10 billion was due to lower sell-in of gaming products.

Nvidia anticipates the second-quarter results to reflect $1.32 billion of charges. Executives also noted that while the data-center total marked a record, it came up “somewhat short of the company’s expectations, as it was impacted by supply chain disruptions”

The announcement prompts questions about “whether this signals a kitchen-sink clearing event or if gaming stays worse for longer,” wrote Jordan Klein, a Mizuho desk-based analyst. “I would have said this cut [was] more good vs. bad NVDA stock post this magnitude of a guide-down as it clears the decks on gaming with massive reset,’ he added.

The company also expects a generally accepted accounting principles (GAAP) gross margin for the latest quarter of 43.2% to 44.2%. “Now I see more questions vs. answers on the reset for many investors” until the company holds its earnings call in late August.
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