Nvidia gives up gains even analysts think Q3 results show bottom in gaming
Justin Sullivan

Nvidia (NASDAQ:NVDA) shares gave up early gains on Thursday after the semiconductor giant reported mixed third-quarter results but offered guidance that suggested sales growth is on the way.
Wedbush analyst Matt Bryson, who has a neutral rating on Nvidia (NVDA), said the company "gave us a lot of what we want to see," especially as the declines in its gaming business looks to have slowed down.
"Nvidia saw better than expected sell-through momentum (helped by new RTX 40 series parts) offsetting continued weak conditions in APAC/China," Bryson wrote, adding that the company's management, led by CEO Jensen Huang, said it expects "modest" sequential growth in this business and that the inventory correction will be done by the end of the fourth-quarter of fiscal 2023. 
Looking to the fourth-quarter, Nvidia (NVDA) said it expects to report revenue of $6B "plus or minus 2%." 
For the third-quarter, Nvidia earned an adjusted 58 cents per share on $5.93B in revenue. Wall Street analysts had forecast Nvidia (NVDA) to earn 70 cents a share on $5.82B in sales for the quarter that ended October 30.
While the gaming business looks to have bottomed and the company's data center business is expected to grow (albeit slightly), the company is not ready to go full-force, âas a "modest" growth trajectory makes it harder to argue for "a significantly higher valuation," Bryson added.
Nvidia (NVDA) recently partnered with Microsoft (MSFT) on a new cloud supercomputer, utilizing artificial intelligence.
Nvidia (NVDA) shares opened at $156.96, down almost 1.5%, while competitors Advanced Micro Devices (AMD) and Intel (INTC) also declined in early trade. 
Susquehanna analyst Christopher Rolland, who has a positive rating and $185 price target on Nvidia (NVDA), up from $180 prior to the results, said the quarter and guidance were "generally in-line" with all segments performing about what was expected. 
"In short, we view this as an ok quarter as the company gets 'back on track' and continues to work through inventory," Rolland wrote.
Bank of America analyst Vivek Arya, who has a buy rating and $205 price target, noted that the company's ongoing issues pertaining to China may give bears some fodder, but a recovery in gross margins and the return to growth for gaming and the data center gains should be enough to keep bulls happy.
On the company's earnings call, Nvidia (NVDA) said the issues surrounding China and the new U.S. export control rules will weigh on the business for some time.