Mitch Steves, an RBC analyst predicts Nvidia’s (NVDA) crypto problem to be bigger than what the firm has admitted it. The analyst on Wednesday (30th Jan) noted that a total of $1.95 billion in revenue was generated by NVIDIA in association with crypto/blockchain rather than $602 million which the company officially announced in their reports.
As per Steves’s calculations, from the period of April 2017 to July 2018, Nvidia’s total crypto revenue should be nearly $2.75 billion. But only 75 percent of the same was accounted and the rest 25% was captured by AMD. Steves arrived at this conclusion by processing the calculations around the latest earning report of Nvidia. Through this information, Steves slashed the price level of the securities.
Based on his calculations around the hash rates of certain graphics processing units requiring cryptocurrencies including Ethereum, the accurate crypto revenue should have been nearly $2.75 billion (for the period of April 2017 to July 2018). As per the estimate made by the analyst, Nvidia took over 75% of the crypto market activity during the period, and the rest was captured by AMD. “There is no proper proof to confirm the figure”, said Steves. He also mentioned that recent revenue report released by AMD adds to the evidence that the crypto revenue of Nvidia’s should be more than it declared.
AMD said on Tuesday that it is foreseeing revenue of around $1.25 billion for the first quarter of the year. This figure shows that there has been a decline of 24 percent over the years because of certain factors that include GPU revenue associated with blockchain, excess channel inventory and lower memory sales.
If we believe AMD’s guidance, the company during the first quarter of 2018 had $234 million in crypto exposure. That barely equals the 25 percent share of crypto revenue, noted Steves.
Nvidia has cautioned about the risks associated with crypto after the expansion and contraction in the economy of digital currencies.
The CEO of Nvidia, Jensen Huang mentioned in August that he foresees no boom in cryptocurrency business in the time ahead. Then at the time of Nvidia’s earnings release for third-quarter, he noted that the figures reflected an excess of channel inventory after the expansion of the economy in cryptocurrency, in which changes will be made.
As suggested by AMD and Nvidia, the overhang in the market of cryptocurrency will be a concern for not more than a quarter. While as per Steves, given the dynamics of the new market, cryptocurrency overhang is more likely to be the issue of concern for a couple of quarters.