Nvidia’s Declining Crypto Mining Sales Take a Toll on Q3 Results, Shares Decline By 17%
Nvidia stock declined by almost 17% when the chipmakers released their third-quarter earnings report.
They fell short of analysts expectations in the second quarter, even though they beat earnings and revenue estimates. The company’s crypto mining products underwent a massive drop in that quarter, and the course lasted in the fiscal third quarter. It has become less profitable to use graphics processing units, or GPUs, for mining.
In the fiscal third quarter, Nvidia’s revenue from original equipment manufacturers and intellectual property figured $148 million, which was down 23 percent year over year. Nvidia’s overall revenue in Q3 was $3.18 billion. Earlier, in August, Nvidia had predicted that Q3 revenue to be between $3.19 billion and $3.32 billion. They even highlighted that their blockchain related sales would diminish significantly.
Nvidia CEO Jensen Huang said: “Our near-term results reflect excess channel inventory post the crypto-currency boom, which will be corrected.” Their CFO Colette Kress said: “Our Q4 outlook for gaming reflects very little shipment in the midrange Pascal segment to allow channel inventory to normalize.”
Analysts say that the ongoing trade wars between the US and China might have added to the conflict too. Although Huang had earlier said that tariffs were not really a factor and the only reason for the decline was the declining cryptos.
Notably, Advanced Micro Devices (AMD), who are Nvidia’s biggest rivals also blamed falling crypto mining demand for their low fourth quarter forecast.