The extra boost Nvidia Corp. received from selling its graphics chips to cryptocurrency miners appears to be over, at least for now….
Nvidia Chief Financial Officer Colette Kress surprised investors — who had already been anticipating lackluster crypto sales — with an even more downbeat forecast for crypto-mining sales Thursday. Nvidia released second-quarter earnings and noted a shortfall in crypto sales in addition to the forecast.
“Our revenue outlook had anticipated cryptocurrency-specific products declining to approximately $100 million, while actual crypto-specific product revenue was $18 million,” Kress said in prepared remarks. “Whereas we had previously anticipated cryptocurrency to be meaningful for the year, we are now projecting no contributions going forward.”
Cryptocurrency was clearly a small part of Nvidia’s overall revenue, which grew 40% in the second quarter to $3.1 billion, led by its gaming business. But as Nvidia’s graphics chips and cards have been used in the past year for mining digital currencies, its stock became popular as an alternative to cryptocurrencies for some investors.
Nvidia had experienced stronger sales earlier this year by those seeking to mine for cryptocurrency like ether, but most investors expected crypto revenue to decline after Chief Executive Jensen Huang predicted a drop while announcing first-quarter earnings results. The value of bitcoin, the largest digital currency, has lost almost half its value this year as a bear market emerged for crypto.
“We did almost $300 million in crypto, and next quarter we expect it to be down by two-thirds of that,” Huang [said] in May.
After reporting $289 million in revenue from cryptocurrency miners buying its graphics cards in that report, the consensus among Wall Street analysts for full-year crypto revenue was $498 million, according to FactSet. That forecast is likely going to drop sharply. And not many analysts asked questions about the crypto shortfall on the company’s call with analysts. One analyst asked if Nvidia knew how much of its GeForce graphics card business had been driven by crypto.
“A lot of gamers at night, they could — while they are sleeping — they could do some mining. And so, did they buy it from mining or do they buy it for gaming, it’s kind of hard to say,” Huang said.
Nvidia shares fell 5% in after-hours trading, even though the company’s second quarter came in better than expected. The downturn in crypto pressured its third-quarter revenue forecast, which called for sales of $3.19 billion to $3.32 billion, lower than the FactSet consensus of $3.34 billion.
Advanced Micro Devices Inc. which has also seen a brief boom from cryptocurrency mining, showed a less drastic decline in its earnings last month, when crypto-related sales fell from 10% of revenue to 6%. AMD’s quarter ended a month earlier, however, which could indicate that blockchain sales plunged in July.
The news means investors who were targeting Nvidia as another way to play cryptocurrency might want to move elsewhere for now. But Nvidia is still reporting strong growth in its other segments, including an 82.6% jump in data-center revenue and a 52.2% increase in its core gaming business. Those segments are larger, still growing, and much more important to Nvidia’s future than the crypto revenues that appear to have disappeared.
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