MarketWatch First Take: Nvidia says crypto-mining boom is over for now

The extra boost Nvidia Corp. received from selling its graphics chips to cryptocurrency miners appears to be over, at least for now.

Nvidia NVDA, -0.63%  Chief Financial Officer Colette Kress surprised investors — who had already been anticipating lackluster crypto sales — with an even more downbeat forecast for crypto-mining sales Thursday. Nvidia released second-quarter earnings and noted a shortfall in crypto sales in addition to the forecast.

“Our revenue outlook had anticipated cryptocurrency-specific products declining to approximately $100 million, while actual crypto-specific product revenue was $18 million,” Kress said in prepared remarks. “Whereas we had previously anticipated cryptocurrency to be meaningful for the year, we are now projecting no contributions going forward.”

Nvidia had experienced strong sales earlier this year by those seeking to mine for cryptocurrency like ether ETHUSD, +0.32%  , but most investors expected crypto revenue to decline after Chief Executive Jensen Huang predicted a drop while announcing first-quarter earnings results.

“We did almost $300 million in crypto, and next quarter we expect it to be down by two-thirds of that,” Huang told MarketWatch in May.

After reporting $289 million in revenue from cryptocurrency miners buying its graphics cards in that report, the consensus among Wall Street analysts for full-year crypto revenue was $498 million, according to FactSet. That forecast is likely going to drop sharply.

Nvidia’s shares fell 5% in after-hours trading, even though the company’s second quarter came in better than expected. The downturn in crypto pressured its third-quarter revenue forecast, which called for sales of $3.19 billion to $3.32 billion, lower than the FactSet consensus of $3.34 billion.

Advanced Micro Devices Inc. AMD, -1.88% , which has also seen a brief boom from cryptocurrency mining, showed a less drastic decline in its earnings last month, when crypto-related sales fell from 10% of revenue to 6%. AMD’s quarter ended a month earlier, however, which could indicate that blockchain sales plunged in July.

A year ago: Nvidia is more bullish on crypto than AMD

The news means investors who were targeting Nvidia as another way to play cryptocurrency might want to move elsewhere for now. But Nvidia is still reporting strong growth in its other, larger segments, including an 82.6% jump in data-center revenue and a 52.2% increase in its core gaming business. Those segments are larger, still growing, and much more important to Nvidia’s future than the crypto revenues that appear to have disappeared.

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