Nvidia forecast lags Wall Street as crypto demand evaporates

FAN Editor
NVIDIA graphic cards are shown for sale at a retail computer store in San Marcos, California
NVIDIA computer graphic cards are shown for sale at a retail store in San Marcos, California, U.S. August 14, 2018. REUTERS/Mike Blake

August 16, 2018

(Reuters) – Nvidia Corp forecast third-quarter revenue below Wall Street estimates on Thursday, citing drying up demand in its cryptocurrency business, sending its shares down nearly 6 percent in extended trading.

The company said it expected current-quarter revenue of $3.25 billion, plus or minus two percent, while analysts on average were expecting $3.34 billion, according to Thomson Reuters I/B/E/S.

Nvidia said cryptocurrency specific revenue plunged to $18 million in the second-quarter from $289 million in the preceding quarter, and was well below the $100 million the company had expected.

“We had previously anticipated cryptocurrency to be meaningful for the year, we are now projecting no contributions going forward,” Nvidia said.

Volatility in the crytocurrency trading has weighed on Nvidia and rival Advanced Micro Devices Inc, which have seen strong demand for their graphics chips that provide the high computing ability needed to mine popular virtual currencies such as bitcoin and ethereum.

The gloomy forecast overshadowed second-quarter revenue and profit beat.

Net income rose 89 percent to $1.1 billion for the second-quarter ended July 29.

Excluding items, Nvidia earned $1.94 per share.

Total revenue rose 40 percent to $3.12 billion.

Analysts on average had expected a profit of $1.66 per share and revenue of $3.10 billion, according to Thomson Reuters I/B/E/S.

Revenue from the company’s closely watched data center chips business rose 83 percent to $760 million, topping analysts’ estimate of $743.6 million, according to FactSet.

The business powers cloud computing services of customers including Amazon.com’s Amazon Web Services, Microsoft Corp’s Azure as well as Alphabet Inc’s Google Cloud.

Rivals Intel Corp and Advanced Micro Devices Inc have also been buoyed by the surge in demand from data centers, a rapidly-expanding market powered by the explosive growth in mobile and Web apps.

Revenue from Nvidia’s core gaming segment rose 52 percent to $1.81 billion, also beating FactSet estimate of $1.75 billion.

(Reporting by Sonam Rai in Bengaluru and Stephen Nellis in San Francisco; Editing by Sriraj Kalluvila)

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