Chipmaker Nvidia sees fewer crypto miners, more gamers in future

Chief Financial Officer Colette Kress said that the company expects cryptocurrency-related revenue to fall 65 percent to about $100 million in the next quarter. Retail prices for Nvidia’s gaming chips surged earlier this year as miners snapped up chips, a development Nvidia addressed by releasing mining-specific chips.

“While supply was tight earlier in the quarter, the situation is now easing,” Kress told investors on a conference call. “Gamers who had been priced out of the market last quarter” were able to get their hands on new chips a reasonable price, she said.

Analyst Kevin Cassidy from Stifel said the reliance on cryptocurrency concerned some investors. Moreover, he said, Nvidia’s earnings were mostly in line with expectations, “which may not be good enough for shares trading at 40x forward earnings.”

Data center industry sales have boomed as cloud services build out new facilities. Intel Corp last month said it had posted its biggest-ever quarterly jump in its data center business. For its part, Nvidia said it doubled sales of chips used by cloud companies for so-called deep learning.

Patrick Moorhead of Moor Insights & Strategy said he was not concerned by the lower-than-expected data center revenue because the buying patterns of huge cloud customers were “lumpy.”

Revenue from Nvidia’s best-known business of gaming chips rose 68 percent to $1.72 billion, beating analysts’ average estimate of $1.65 billion.

“At the core of it, gaming is strong,” Chief Executive Jensen Huang told investors on the conference call. “The pent-up demand is quite significant and I’m expecting the gamers to be able to buy new GeForces pretty soon.”

A cryptocurrency boom has powered growth at Nvidia and rival Advanced Micro Devices Inc, but the sector is battling volatility caused by swings in the currency’s value.

Revenue from Nvidia’s automotive business, which includes its Drive platform used in self-driving cars, rose 4 percent to $145 million, also topping analysts’ estimate of $132 million.

Nvidia in March suspended self-driving tests across the globe, a week after an Uber Technologies Inc autonomous vehicle struck and killed a 49-year-old woman crossing a street in Arizona. But CEO Huang remained optimistic.

“I expect that driverless taxis will start going to market about 2019,” Huang told investors.

The company’s net income rose to $1.24 billion, or $1.98 per share, in the first quarter ended April 29, from $507 million, or 79 cents per share, a year earlier.

Total revenue rose to $3.21 billion from $1.94 billion.

Excluding items, Nvidia earned $2.05 per share.

Analysts on average had expected revenue of $2.91 billion, according to Thomson Reuters I/B/E/S.

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