Nvidia’s shares saw a sharp drop of about 5% after the market closed yesterday as the company’s revenue took a beating over reduced demand for cryptocurrency mining. The company reported that the sales of their Graphical Processing Units [GPUs] for mining purposes was much lower than expected.
Nvidia also stated that they were not expecting any sales related to the mining sector for the rest of this year. This will come as a breath of fresh air to Nvidia’s customer base of retail consumers, as they saw a substantial markup on the prices of graphics cards earlier this year due to decreased supply.
In January this year, the price of Nvidia’s latest flagship card, the GeForce GTX 1080Ti, went up from a suggested price of $700 to almost $1300. The increase was also reflected in other cards, such as the GeForce GTX 1080, which saw an increase from $500 to $900. This was reflected across the lineup of cards that Nvidia offered, with prices close to double their MSRP for the GTX 1070, 1060, and 1050Ti.
The Chief Financial Officer of Nvidia, Colette Kress, said:
“Our revenue outlook had anticipated cryptocurrency-specific products declining to approximately $100 million, while actual crypto-specific product revenue was $18 million.”
She went on to say:
“Whereas we had previously anticipated cryptocurrency to be meaningful for the year, we are now projecting no contributions going forward.”
On the non-mining side, Nvidia reported a surge of 52% in gaming revenue. This pattern was also observed across the board, with revenue beating analysts’ prediction across markets of data centers, visualization, and auto-related revenue.
Moreover, they recently announced that they will be launching a new set of cards earlier this week. This lineup of cards is targeted at designers, with a price tag of $10,000. It also utilizes a new architecture to build the card, known as the Turing architecture.
The CEO of Nvidia, Jensen Huang, said that even though they projected cryptocurrency mining to be a “larger contribution” through 2018, they consider it to be “immaterial” now.
Overall, the company reported a net income of $1.1 billion in the second quarter, with earnings at around $1.76 per share. This also beat analysts’ predictions of $1.67 a share.
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