By Sonam Rai and Stephen Nellis
(Reuters) – Nvidia Corp
The company’s bleak outlook for cryptocurrency chips was a sharp reversal from the prior fiscal quarter, when sales to so-called miners of digital currencies such as bitcoin and ethereum amounted to $289 million, nearly a 10th of Nvidia’s revenue. Nvidia previously had forecast sales for cryptocurrency chips for the fiscal second quarter ended July 29 of about $100 million. On Thursday it reported actual revenue of only $18 million.
“Whereas we had previously anticipated cryptocurrency to be meaningful for the year, we are now projecting no contributions going forward,” Nvidia said. It projected third-quarter revenue of $3.25 billion, plus or minus 2 percent, falling short of analyst estimates of $3.34 billion, according to Thomson Reuters I/B/E/S.
Ahead of a conference call with analysts, shares were down 3.6 percent to $248, still quadruple their value two years ago. Shares of Nvidia’s chief rival in the graphics chip market, Advanced Micro Devices Inc
Analysts were troubled by Nvidia’s gross margin forecast of 62.8 percent, slightly below expectations of 62.9 percent and possibly a result of putting more memory modules on its chips.
Analyst KinNgai Chan of Summit Insights Group said Nvidia shares were likely to trade lower as analysts reset their expectations around slower growth rates.
The cryptocurrency news and the lower-than-expected forecast clouded an otherwise strong quarter, including Nvidia’s sales of chips to data centers, where companies such as Amazon.com’s
Nvidia’s largest and oldest business of selling graphical processing units, or GPUs, for video game players beat analyst estimates, bringing in $1.8 billion compared with estimates of $1.75 billion, according to data from FactSet.
Analysts had braced for lower gaming chip sales because Nvidia is widely expected to unveil a new generation of gaming chips ahead of the holiday shopping seasons, possibly as soon as next week. Gamers typically hold off on purchasing chips when new models are just around the corner.
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.
Rivals Intel Corp Net income rose 89 percent to $1.1 billion for the fiscal second-quarter. 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.
(Reporting by Sonam Rai in Bengaluru and Stephen Nellis in San Francisco; Editing by Sriraj Kalluvila and Leslie Adler)