Nvidia In a Slump Thanks to Alleged Fall in GPU Demand
GPU maker Nvidia has announced its financial results for the first fiscal quarter. Figures were relatively high, with the company having earned over $3 billion USD in just the first months of 2018.
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This is a ten percent increase from the previous quarter, and approximately 66 percent higher than the company’s revenue in the first quarter of 2017. It’s also 145 percent higher than where revenue stood for this period in 2016.
A Lot of Money for One Company
This is primarily due to surging rises in ether and other cryptocurrencies during recent months. Graphics cards are required to mine these cryptocurrencies, and thus demand has been at an all-time high.
“Cryptocurrency demand was again stronger than expected, and we fulfilled most of it with crypto-specific GPUs, which are included in our OEM business at $289 million,” said the company’s CFO Colette Kress. “As a result, we could protect most of our limited GPU supply for use by gamers.”
Overall, it appears the sales of GPUs to cryptocurrency miners account for roughly ten percent of the company’s total revenue.
A Turn for the Worse?
However, as cryptocurrencies continue to experience overwhelming drops in their prices and values (as they’ve done over the past week), Nvidia is expecting to see this GPU boom come to a steady halt in the future. Executives recently commented that GPUs are now significantly cheaper than what they were just a year ago, and that they are projecting the next quarter’s cryptocurrency-specific revenue to be a third of what it was during the first quarter of 2018.
Granted the price of cryptocurrencies like bitcoin continue to fall, consequences will be rough for GPU makers. Not only will miners stop buying new GPUs – they may start selling the GPUs they’ve already collected. This could arguably push graphics-card values well below invoice prices, forcing mining companies into a depression-like state.
Crashing and Burning
Following the news, Nvidia’s stock shares fell by roughly eight percent.
“Crypto-miners bought a lot of our GPUs during the first quarter, and it drove prices up,” confirmed CEO Jensen Huang in a recent interview. “And so, we’re starting to see the prices come down. We monitor spot pricing every single day around the world, and the prices are starting to normalize.”
Aside from the drop in “mining hype,” the new Ethereum-capable Bitmain ASIC’s seriously threaten current demands for GPUs. Investors are growing more concerned that Nvidia’s $1.723 billion in gaming sales could also suffer.
Can Nvidia pick up the pace and recover? Post your comments below.
Images via YouTube, Medium, NVIDIA