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

Jensen Huang CEO and founder Nvidia speaking at GTC Summit 2018

"We now expect a negligible contribution going forward", Kress added. For the third quarter, Nvidia estimates revenue of $3.19 billion to $3.32 billion, but analysts surveyed by FactSet expect revenue of $3.34 billion.

For a second quarter in a row, investors ignored Nvidia's growth in its main markets and ditched the stock, which fell about 5% in extended trading. Specifically, the GPU giant forecast its revenue to be within 2% of $3.25 billion, worse than prior Street estimates of $3.34 billion. Since the beginning of 2016, Nvidia shares have risen 769%, compared with a 48% rise in the S&P 500 Index. 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.

Reports suggest that the upcoming Nvidia GTX 1180 will be able to deliver similar performance as compared to the Titan V and keeping in mind that this is a $3000 graphics card that we are talking about, that is some serious performance.

Despite the guidance bummer, Merrill Lynch analyst Vivek Arya remains bullish on NVDA shares, reiterating a Buy rating and price target of $340, which implies an upside of 35% from current levels.

Nvidia founder and Chief Executive Officer Jensen Huang is reshaping his company to take advantage of trends that are changing computing.

"Developers are jumping on the GPU-accelerated computing model that we pioneered for the boost they need", Huang said in a statement.

While data centre chips now account for a fifth of revenue and are increasingly a driver of overall growth, the company still gets most of its profit from its GeForce graphics processors.

Fortunately, Nvidia's growth in other segments seems to be unaffected, with an 82.6 percent and 52.2 percent increase in data-center and core gaming revenue respectively. Automotive grew 13% to $161 million.

The cryptocurrency mining boom appears to be at an end, as Nvidia for one has warned that the market has topped out, and declines are ahead.

So that really is curtains for crypto, at least for the likes of Nvidia and AMD's sales surge. Google has its own Tensor Processing Unit for AI that it doesn't sell but uses in its cloud data centers.

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