Shares in computer hardware manufacturer Nvidia fell 5% yesterday after the company announced that the market for its chips used for cryptocurrency mining had largely disappeared. Although its quarterly results exceeded expectations, predicted sales fell below targets set by Wall Street.
In the first quarter of 2018, chip sales to crypto-miners totalled $289 million, nearing 10% of total company revenue. Although Nvidia predicted that sales in this area would slow, at $18 million actual revenue from the sector was far lower than the expected $100 million.
“No cryptomining going forward”
Nvidia CEO Jensen Huang told analysts that the company had, “benefited in the last several quarters from an unusual lift from crypto.” However, for the second half of the year they are now considering the crypto demand to be “immaterial.” “We’re projecting no cryptomining going forward,” Huang said.
Despite the slow down in its crypto business, Nvidia reported that its main business operations were “terrific” and the company was still showing strong year-on-year growth. The recent crypto-mining revenue is best seen as an unexpected bonus, and one which cannot be relied on going forward.
Pivoting towards Artificial Intelligence
In the period ending July 29th the company made record sales of $3.12 billion. Huang has been pivoting his company towards the burgeoning field of artificial intelligence, and now many data centres are using modified versions of Nvidia graphics chips to run voice and image recognition software.
For now though, most company revenue comes from its traditional market of PC gamers. Persuading them to upgrade to the latest chip for the most immersive experience has been key to the business model thus far. Expectations that a new design will be released later in the year are believed to have slowed purchases.
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