Nvidia Surprises with Earnings Beat, Strong Crypto Demand Surprises It

While it can’t quantify the exact effect cryptos are having on its business, Nvidia is acknowledging demand is increasing.

To the surprise of Nvidia’s executives, demand from the cryptocurrency market has been stronger than expected. So strong has this demand been that it may have helped boost the company’s Q4 2018 revenues above the numbers posted for Q3 2018.

During the conference call that followed its earnings release, Nvidia’s chief financial officer Colette Kress said:

“Strong demand in the cryptocurrency market exceeded our expectations. We met some of this demand with a dedicated board in our OEM business.” 

Let’s discuss how cryptos are contributing to Nvidia’s top and bottom lines.

Earnings and cryptos

While the Nasdaq, which is where Nvidia is listed, slid to near correction territory on Thursday, Nvidia’s strong earnings report pushed its stock higher.

On the doom-and-gloom trading day that was Thursday, investors cheered Nvidia, and caused its stock to rally higher more than 10%. Nvidia posted record quarterly revenue of $2.91 billion, up 34% from a year ago. It also recorded full-year revenue of $9.71 billion, up 41% from a year ago.

The increased crypto demand is thought to have boosted the growth in sales for the company’s Pascal-generation graphics processing units (GPUs) for gaming.

Kress said:

“While the overall contribution of cryptocurrency to our business remains difficult to quantify, we believe it was a higher percentage of revenue than the prior quarter.”

When questioned further by an anlayst on the conference call about cryptos and how they will affect the business in the future, Kress said:

“It’s up a bit from what we saw in Q3 and we do again expect [it to continue] probably going forward.”

Crypto anxieties

Nvidia has been reluctant to place much emphasis on how crypto demand is affecting its overall business, hence why they don’t break out sales based on crypto. One of the reasons can be attributed to the volatility in the space.

While acknowledging the increased crypto demand, Kress said:

“…our main focus remains on our core gaming market, as cryptocurrency trends will likely remain volatile.”

Nvidia is seemingly hell-bent on investors staying focused on its overall gaming business, and subsequent profits from it. We told you about how the company appears worried that gamers might slow down graphics cards purchases, since cryptocurrency miners are not a stable customer base.

Still, it can’t be ignored how investors have been enamored with how cryptos have contributed to Nvidia’s business. Since May 2017, its stock price doubled from just above $100 to a 52-week high of $249.27.