Nvidia is about to announce lower quarterly results. In fact, the fall in cryptocurrency prices severely reduced demand for graphics cards in the second quarter.
Nvidia just warned its shareholders. Before releasing the final quarterly results, the American company forecasts 19% drop in sales. Nvidia expects Q2 revenue to be around $6.70 billion, a far cry from the $8.10 billion the market was expecting.
With this warning, Nvidia wants to prepare investors for the announcement of the final financial results, which will take place on August 24, 2022. The warning was poorly received by financial markets. NVDA Stock Price shrunk by more than 6% in 24 hours.
GPU demand has dropped due to cryptocurrency miners
Nvidia attributes the drop in sales to the results of its video game business, which includes the following graphics cards. The demand for GPUs is visibly weaker than in the previous quarters, which are characterized by a chronic shortage. Partners such as Evga, MSI, Asus, Zotac and Gigabyte ordered significantly fewer graphics cards in the reporting period. Nvidia did not expect GPU demand to shrink so quickly, the statement said.
” As we expect macroeconomic conditions to impact sales, we have taken action with our gaming partners to adjust channel pricing and inventory “Explains Jensen Huang, the boss of Nvidia, and predicts a new price drop.
Nvidia’s video game division reported preliminary revenue of $2.04 billion in the second quarter. down 44% in three months. That ” sales forecasts » of the division were significantly reduced in the period under review, notes Jensen Huang.
The collapse in GPU demand is a direct result of the cryptocurrency crash. The crypto asset market has been in the red since May. Bitcoin crashed around $23,000 causing all digital assets to fall.
In this complicated context Cryptocurrency Mining Centers, including Ethereum, are experiencing a drop in profitability. Ultimately, miners no longer invest in new graphics cards. However, crypto miners have always had a significant impact on the demand for GPUs. In 18 months, miners injected $15 billion into the graphics card market.
With cryptocurrency prices falling, many of them are reselling their mining machines on second-hand sites for bargain prices. Buyers then turn to the used market at the expense of new graphics cards. This isn’t the first time the cryptocurrency industry has punished Nvidia’s earnings. Back in 2018, the decline of Bitcoin and other currencies had weighed on the company’s financial results. The company had found itself with a stash of unsold GPUs in its hands.