Nvidia to See Increased Revenue Despite Crypto Market Slump, Analysts Claim

Nvidia to See Increased Revenue Despite Crypto Market Slump, Analysts Claim

Omar Faridi
  • Nvidia, a leading computer chip manufacturer, is still expecting an increase in its Q2 revenue, despite declining sales of its GPUs to cryptocurrency miners.
  • Nvidia reported there is a huge growth in demand for its GPUs, used in the core gaming market and data-centers.

Factset, a financial data firm, recently revealed that Nvidia’s second and third-quarter revenue will likely increase, according to various analysts. This, despite Nvidia’s reportedly declining sales of its graphics-processing units (GPUs) for cryptocurrency mining.

An expected increase in revenue could come from the growing demand for Nvidia’s new chips, which are now being used by servers in large data-centers.

Huge Growth In Demand

The giant chipmaker has also created specialized processors for self-driving vehicles, but it could take some time before their sales make a significant impact on its overall revenue. For now, the majority of Nvidia’s earnings may still be attributed to a huge growth in demand for its GPUs in the core gaming market.

Notably, total yearly revenue from Nvidia’s gaming graphics cards is projected to be around $1.75 billion, nearly 50% more than the previous year. Meanwhile, the California-based tech company expects its data-center earnings for 2018 to increase by a sizable 78% to $740 million.

C.J. Muse, a senior equity research analyst and managing director at Evercore, stated: “data Center/AI remains an area of strength, particularly when considering additional benefit of a new gaming cycle favoring Nvidia.”

Muse noted that concerns regarding declining sales of GPUs in the crypto mining sector were unwarranted. He added:

We believe concerns around a likely falloff from cryptocurrency-driven Ethereum GPU mining strength are largely exaggerated, and Nvidia will likely power through any tough compares from cryptocurrency-driven tailwinds.

C.J. Muse

Moreover, nearly 10% of Nvidia’s $3.2 billion Q1 revenue reportedly came from the crypto mining industry. Notably, earnings from GPU sales to crypto miners accounted for 76 percent of OEM (Original Equipment Manufacturer) revenue, Nvidia revealed.

Crypto Revenue Drop Expected

While these numbers do represent a 115 percent growth from last quarter, Nvidia expects its crypto market revenue to drop by about two-thirds for Q2 of this year. This may be largely attributed to the declining prices of most cryptocurrencies.

Advanced Micro Devices (AMD), Nvidia’s primary competitor, also recently commented on its low revenue from the crypto mining sector. In fact, as reported by CryptoGlobe, the world’s largest chip manufacturer is expecting “near zero” revenue from the crypto and blockchain market for the next quarter.

Notably, AMD’s CEO Lisa Su referred to blockchain as “a bit of a distraction in the short-term”, something that doesn’t seem to be discouraging many other electronics companies from developing high-end chips specifically for cryptocurrency mining. Asus, a Taiwanese computer hardware company, said in May that it would be launching a “second-generation” crypto mining motherboard during third quarter 2018.