Nvidia’s Cryptocurrency Sales Expected to Drop in Fiscal Second Quarter

Nvidia Corporation (NVDA) experienced a crypto boom in the first quarter, as chip sales to the digital currency market exceeded expectations. However, sales are expected to slow significantly over the next three months, fueling fresh concerns about mining demand and the health of the overall blockchain industry.

Nvidia Unveils Crypto Sales

For the first time, the California-based chipmaker has revealed how much revenue it generated from sales to the crypto market. In its Thursday earnings call, Nvidia said it generated $289 million in first-quarter chip sales to digital currency miners, a figure that far exceeded forecasts calling for about $200 million.

However, the company urged investors to evaluate the revenue figures carefully because sales are likely to plummet in the July quarter. Nvidia said it expects crypto revenues to decline by roughly two thirds in the current fiscal quarter.

“Crypto miners bought a lot of our GPUs in the quarter and it drove prices up,” Nvidia CEO Jensen Huang said on a conference call that was quoted by Bloomberg. “I think that a lot of gamers weren’t able to buy into the new GeForce as a result.”

Company shares fell as much as 3.8% after-hours. Share prices settled down 2.9% in extended trade.

Nvidia reported first-quarter earnings of $1.98 a share on a GAAP basis, which was well above forecasts of $1.46. Revenues jumped to $3.21 billion, well ahead of forecasts calling for $2.89 billion.

Declining Prices Linked to Weak Forward Guidance

Some analysts have linked volatile cryptocurrency prices to Nvidia’s worsening outlook for sales to the sector. Last month, Wells Fargo slashed its profit forecast for Nvidia due to falling cryptocurrency prices, especially for Ethereum.

With ether prices plunging nearly 70% from its January price, Wells Fargo predicted subsequently declines in quarterly revenues. In fact, analyst David Wong issued a per-share target price of $100 for NVDA. The stock closed at $260.13 on Thursday after setting a new intraday high.

While the fate of ‘crypto proxy stocks’ is closely intertwined with digital currency prices, Nvidia serves a much wider audience than the blockchain community. This gives the chipmaker more of a buffer against price volatility in the cryptocurrency market.

That said, the company is said to be an important cog in the mining industry. For the time being, graphic cards supplied by Nvidia and AMD (AMD) are the most likely to be used in the mining process.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi