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Nvidia to Profit in Q3 2018 Despite Crypto Mining Decline

Last Updated March 4, 2021 3:55 PM
Conor Maloney
Last Updated March 4, 2021 3:55 PM

While crypto mining is experiencing a slowdown due to Bitcoin and other cryptocurrencies yielding lower mining profits worldwide recently, tech giant Nvidia Corp. is still expected to generate healthy revenue in Q3 of 2018.

The tech company is seeing strong sales in its staple market, gaming, with graphics processing units still flying off the shelves as well as chips for data centers doing very well this year. It’s difficult to say exactly how many graphics cards are being sold for gaming as opposed to mining, but recent data indicate that the cost of mining one bitcoin  is actually greater than the market value in many parts of the world at the moment, with other areas seeing minor profit margins.

Despite the market decline hitting miners where it hurts, Nvidia graphics unit sales are still high to cater for the international gaming community, and the prices have experienced a surge due to prior demand for cryptomining ventures.

Nvidia’s other ‘side business’ is also taking a hit as Tesla has announced that they will no longer be using Nvidia chips in their self-driving cars, something which currently generates an estimated $50 million in revenue for Nvidia. However, Nvidia CEO Jensen Huang insists that that sum is immaterial to Nvidia’s overall profitability – the company made $3.21 billion in Q1 2018 alone, with 9% or $289 million of that from cryptocurrency mining sales.

Susquehanna Financial analyst Christopher Rolland weighed in to agree with Huang, saying :

“While disappointing for Nvidia, we believe this represents less than $50 million of annual revenue and won’t be replaced until 2019.”

Rolland, who has a has a neutral rating and a $250 price target on Nvidia, added that Nvidia data-center sales are expected to generate high revenue according to his Asia graphics processing units checks, along with Nvidia’s rise in the supercomputer field , with chips powering about 19% of the world’s top 500 supercomputers.

Meanwhile Evercore analyst C.J. Muse, who has an outperform rating and a $275 price target on Nvidia, also felt that Nvidia’s core business model would easily carry the firm through any sales drops experienced in their cryptocurrency mining ventures, citing the rumored release of the next gen GTX11 or “Turing” GPU series as a product that will net the company strong profits overr the next two years.

“Data Center/AI remains an area of strength, particularly when considering additional benefit of a new gaming cycle favoring Nvidia,” Muse said, adding:

“We believe concerns around a likely falloff from cryptocurrency-driven Ethereum GPU mining strength are largely exaggerated, and Nvidia will likely power through any tough compares from Cryptocurrency-driven tailwinds.”

Featured image from Shutterstock.