Nvidia Falls 5% as Demand for Crypto-Related Chips Dries Up

Alfred Osborne
August 18, 2018

"We're projecting no cryptomining going forward". Nvidia originally anticipated "cryptocurrency-specific product revenue" reaching $100 million during the quarter, but it actually came in at a mere $18 million, the company's CFO Colette Kress said in an earnings call.

Shares of Nvidia were down more than five percent in after market trading.

The company reported better-than-expected earnings results at $1.76 (£1.38) per share versus the $1.66 (£1.30) per share expected by analysts, and by division, things weren't too bad either. Investors have been attracted to the stock, pushing shares up 33 percent this year compared with a 6.4 percent advance by the Philadelphia Stock Exchange Semiconductor Index.

"Growth across every platform-AI, Gaming, Professional Visualization, self-driving cars-drove another great quarter", said Jensen Huang, founder and CEO of Nvidia.

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The cryptocurrency news and the lower-than-expected forecast clouded an otherwise strong quarter, including Nvidia's sales of chips to data centers, where companies such as Amazon.com's (AMZN.O) Amazon Web Services, Microsoft Corp's (MSFT.O) Azure as well as Alphabet Inc's (GOOGL.O) Google Cloud are buying up the chip to power artificial intelligence and other functions.

Ramsay wrote, "While we do not expect a formal announcement regarding the timing of NVIDIA's next generation Turing gaming GPU launch, we believe NVIDIA has likely been aggressive in the gaming channel ahead of its launch". Data-center revenue increased 83 percent to $760 million.

Rivals Intel Corp (INTC.O) and AMD have also been buoyed by the surge in demand from data centers, a rapidly expanding market powered by the explosive growth in mobile and Web apps. It also appears to be over, at least for now, and Nvidia does not anticipate that changing in the coming months.

Over the quarter net income rose 89 per cent to $1.1 billion, with gaming revenue jumping 52 per cent from a year ago, reaching $1.8 billion. Total revenue rose 40 percent to $3.12 billion.

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