Nvidia's stock plummets as GPU crypto mining death fears intensify
Surprisingly enough, after the announcement of the record earnings for Q1 fiscal year 2019, Nvidia’s stock dwindled 7.85%. The green company revealed that US$287 million was generated by direct sales to crypto-mining-related endeavors, but Nvidia’s analysts predict that this type of revenue will decline by two-thirds during the current quarter.
Nvidia also admitted that some of the US$1.723 billion generated by the gaming sales may be attributed to small-time crypto miners and even professional mining businesses. Ethereum GPU-mining is currently being threatened by the upcoming launch of Bitmain’s Antminer E3 ASIC miners, and this could considerably reduce the demand for Nvidia and AMD cards for the rest of the year. This is one of the main reasons that prompted investors to fear for sharp losses, triggering a substantial stock downfall.
Nevertheless, CEO Jensen Huang is trying to reassure everyone that Nvidia is able to counter this grim outcome as games like Fortnite: Battle Royale and PUBG should contribute to a greater GPU demand, while the prices of current gen cards have been restituted to near-MSRP levels due to replenished stocks. On the flip side, this restocking is clearly triggered by lower crypto mining demands, and, in the eventuality of a complete collapse of the GPU-based crypto mining endeavors, the market could get flooded with cheap GTX 10xx series cards, which would be more appealing for gamers. Moreover, there will be a fair number of gamers who will want to wait for the next gen GPUs coming later this year.
To end on a positive note, Nvidia’s next gen GPUs may actually lead to a drop in prices for all the current gen cards, so these could get absorbed faster and the GTX 11xx series should be launched with MSRP prices, contributing for some fair revenues towards the end of 2018.