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Cryptocurrency Fear Drags NVidia’s Stocks Down

Cryptocurrency Fear Drags NVidia’s Stocks Down

Cryptocurrency Fear Drags NVidia’s Stocks Down

The stock of Nvidia has seen a huge rise in its value to an all-time high of over $260 earlier this week which surpassed its 2017 value comfortably. But, analysts and investors have been debating on crypto implications after the release of company’s latest earnings report.

After the market closed on Thursday, it was informed that Nvidia’s first-quarter revenue increased by 66{d433fa1c024495e3d30fb9a8ae174a80907308b9b8a5f0e72f30e7e693d34bc9} to $3.2 billion, which as way more than analysts predicted. Also, the net income per share ended at $2.05 double than the previous value and more than expectations.

But, the company faced negative responses from data centers which are the primary consumer of its graphics chips in artificial intelligence apps and machine learning. The company was able to raise only $701 million which is less than the usual earnings. Moreover, the graphics chip sales to bitcoin miners also saw a steep decline as only $289 million was generated from volatile sales. It should be noted that the company sold its graphics chips at $900 to bitcoin miners which is three times the hike on its original value.

According to some investors, mining activities that demand massively complex computing calculations can perish due to the continuous decline in the price of digital currencies. It is also being reported that few smaller chipmakers from Asia are working on more efficient and specially designed mining chips. It would probably eat out on the market domination of Nvidia and its rival company named Advanced Micro Devices. Intel has not been able to produce graphics chips that can be used in the mining of digital currencies.

Colette Kress, CFO Nvidia, said, “Looking into Q2, we expect crypto-specific revenue to be about one-third of its Q1 level.

On Friday, Joe Moore, an analyst at Morgan Stanley, said, “Cryptocurrency mining continues to inject noise into an overall very strong growth story.” He claims that demand created by bitcoin miners is the major reason for Nvidia to beat revenue expectations. He further stated that Nvidia would balance the decline in demand from crypto miners through growth in other sectors. Moore has raised his price expectation on Nvidia’s stock from $258 to $273.

Stacy Rasgon, an analyst at Bernstein Research, advised investors to stop being pessimistic about the impact of crypto sales. He stated, “There was very little to nitpick on regarding execution, and as numbers continue their inexorable march higher we continue to believe the story has legs.”

Bitcoin mining has become more competitive as people have started to take a significant interest in the industry. New regulations in different countries have hampered the current business owners, and some of them have even ceased their operations. Countries like China and India have banned crypto mining which has inspired several countries to take stringent policies against the operations.

But, considering the fact that bitcoin has gained value in recent weeks, miners would again conduct their affairs a full swing. As experts are predicting a huge increase in bitcoin’s value by the end of 2018, i.e., more than $20,000, it would not be a surprise if companies like Nvidia start gaining tremendous profits again.

About the author

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Sean Halverson

Sean Halverson knows an emerging opportunity when he sees one. He's gone big into cryptocurrency. He has been contributing towards ICO Advisory and Start-Up since a couple of years. With his experience, he decided to study the cause and effects of fluctuations in the cryptocurrency market and to share his knowledge with the crypto enthusiasts.

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