Nvidia Expects Lower Revenue Due to Demand from Crypto Miners, Stock Price Falls 5%

Nvidia, whose stock is listed on the Nasdaq stock exchange, presented lower-than-expected revenue guidance because of decreasing demand for its chips used by crypto miners.

Nvidia’s stock price fell on Friday after the US chip maker reported on Thursday revenue forecasts below Wall Street experts’ expectations. The company pointed that the bearish trend in the cryptocurrency market lowered demand for its chips used by crypto miners, which negatively influences the sales. Revenue from crypto products declined to $18 million for the second quarter, way below the figure recorded in the previous quarter at $289 million. According to Morgan Stanley, the indicator “will be basically zero from here.”

Nvidia chief financial officer Colette Kress said in a release seen by CNBC:

“Our revenue outlook had anticipated cryptocurrency-specific products declining to approximately $100 million while actual crypto-specific product revenue was $18 million, and we now expect a negligible contribution going forward.”

Nvidia CEO Jensen Huang said that, as of today, the executives believe cryptocurrency won't be significant to the company for the second half of this fiscal year.

The total market capitalization of the cryptocurrency space has declined this week to the lowest level since November 2, 2017, losing all the gains amassed in December and January. Bitcoin’s lower prices don’t help miners given that they have to invest considerable funds to buy the equipment and spend for the electricity. Thus, many of them are giving up or reducing their mining activities.

However, the losses triggered by the cryptocurrency space can be compensated by the Nvidia’s main business – gaming, and the second largest segment, which is data center. Kress said that the company executives are expecting both sectors to grow.

The sales might be boosted based on the upcoming generation of its graphics cards based on the new so-called Turing architecture, which will become available in the fourth quarter. Nvidia announced its eight-generation graphics chips on Monday during a conference in Vancouver, British Columbia. The analysts are optimistic about the new product generation and say that the sales will be positively impacted.