What happened
Week to date, shares of Nvidia (NVDA +1.95%) were up 9.5% as of 12:59 p.m. ET on Friday, according to data provided by S&P Global Market Intelligence. Nvidia got a boost this week after the Senate voted to pass the Chips for America Act that would provide subsidies for semiconductor companies.
Investors are digesting this positive development along with a weak outlook for Nvidia in the near term, as prices collapse for graphics chips.
NASDAQ: NVDA
Key Data Points
So what
The Senate bill would provide over $50 billion in subsidies and tax credits for U.S. chip companies, which is intended to strengthen America's chip supply chain.
In other news, analysts are slashing their estimates for Nvidia's gaming segment, which comprised nearly half of total revenue last quarter. Graphics cards from Nvidia and Advanced Micro Devices have fallen by double-digit percentages in recent weeks, as demand weakens across the PC market. The International Data Corporation's latest report showed a 15% decline in PC shipments in the second quarter, which could impact Nvidia's earnings results.
Now what
Nvidia will report fiscal second-quarter earnings on Aug. 24. Management already expects a deceleration in revenue growth. Investors will be looking for insight from management on the outlook for the rest of the year, especially as it relates to Nvidia's data center segment and release schedule for Nvidia's GeForce RTX 40 series gaming chips.
Data center has benefited from robust spending on hardware to power advanced computing workloads. Nvidia reported growth of 83% year over year in data center in the most recent quarter. But near-term weakness in consumer spending has taken over the narrative for now. The consensus analyst estimate has Nvidia growing full-year revenue by 24%.
