Nvidia is about to report lower quarterly results. In fact, the drop in cryptocurrency prices led to a sharp drop in demand for graphics cards during the second quarter.
Nvidia has just warned its shareholders. Before publishing its final quarterly results, the US company expects 19% decrease in trading volume. Nvidia expects sales of about $6.70 billion for the second quarter, far from the $8.10 billion the market had expected.
With this warning, Nvidia seeks to prepare investors to announce its final financial results, which will take place on August 24, 2022. The warning was poorly received by financial markets. NVDA stock price More than 6% contracted within 24 hours.
GPU Demand Dropped Due to Cryptocurrency Mining
Nvidia attributes the decline in revenue to the results of its video game business, which include screen cards. It is clear that the demand for GPUs is weaker than in previous quarters, which is characterized by a chronic shortage. Partners such as Evga, MSI, Asus, Zotac, and Gigabyte ordered fewer graphics cards during this period. The statement notes that Nvidia did not expect GPU demand to shrink so quickly.
” As we anticipate the overall conditions affecting the sale to continue, we have taken action with our gaming partners to adjust channel pricing and inventory. Jensen Huang, president of Nvidia, explains that it foretells a new price drop.
Nvidia’s video game division announced second-quarter preliminary revenue of $2.04 billion, By 44% in three months. The ” Sales forecast »The division was greatly reduced during this period, notes Jensen Huang.
The collapse in GPU demand is a direct consequence of the collapse of the cryptocurrency. Since May, the crypto-asset market has been in the red. Bitcoin crashes around $23,000 causing all digital assets to plummet.
In this complex context, Cryptocurrency mining centersEthereum, including Ethereum, is experiencing a decline in profitability. Ultimately, miners are no longer investing in new graphics cards. However, cryptocurrency miners have always had a huge impact on the demand for GPUs. Within 18 months, miners had pumped $15 billion into the graphics card market.
In the face of falling cryptocurrency prices, many of them are reselling their miners on second-hand sites at a bargain price. Then buyers turn to the flea market, at the expense of new graphics cards. This is not the first time that the cryptocurrency industry has penalized Nvidia’s revenue. In 2018, the decline in bitcoin and other currencies really affected the company’s financial results. The company found itself with a stockpile of unsold GPUs on its hands.