Nvidia Share Prices Plummet, Chipmaker Reveals Declining Sales from Crypto Mining Business

Omar Faridi

Nvidia Corporation, a Delaware, US-incorporated and California-based developer of high-end GPUs, had informed its investors that they must not expect sizable revenue from the company’s cryptocurrency mining hardware business.

Nvidia's Shares Plummet 15%

On November 15th, the giant American technology firm reported its quarterly earnings - which showed that the chipmaker’s projected almost $1 billion less in total revenue (compared to to what analysts had predicted) is largely due to declining sales and overall demand for crypto mining hardware.

Notably, Nvidia’s stock price dropped over 15% during after-hours trading to approximately $170 (per share).

Nvidia’s share prices had also fallen by 5% when the giant chipmaker revealed last quarter that its revenue from crypto mining had been steadily declining.

Jensen Huang, the founder and CEO of Nvidia, had noted at the time that it was “not including … contributions from crypto in [its] outlook.”

Commenting on the correction in the tech firm’s stock price, Huang said: “Our near-term results reflect excess channel inventory post the crypto-currency boom, which will be corrected.”

"Crypto Hangover" Lasts "Longer Than Expected"

Huang explained: 

The crypto hangover lasted longer than we expected. We thought we had done a better job managing the cryptocurrency dynamics.

Nvidia CEO

Notably, Nvidia had to stop shipping several models of its mid-priced computing chips to vendors, as the tech firm’s products have been stacking up in retailer’s warehouses.

Nvidia’s provision for inventories reportedly increased to $70 million in Q3 2018, and the company stated that the same provision had increased over three times during the first nine months of its financial year (FY) to $124 million.

Moreover, Nvidia’s gross margins declined by 1.8 percent in Q3 to 60.4 percent - which the company attributed to $57 million in excess charges from its old chip models following the sharp decline in the demand for digital currency mining hardware.

Nvidia CEO: US-China Trade Wars "Not A Factor" In Declining Revenue

The ongoing US-China trade conflict may have adversely affected Nvidia’s business, according to analysts. Starting from January 1st, 2019, tariffs on many goods imported from China are expected to increase by up to 25 percent.

Haris Anwar, an analyst at Investing.com, remarked: 

Nvidia’s inventory build-up is suggesting that the escalating tariffs have started to pinch producers.

Investing.com Analyst

However, Huang said that tariffs were “not really a factor”, and he claimed that the company’s inventory build was mainly due to significantly lower demand from the crypto mining sector.