The market cap of Nvidia has dropped by more than $23 billion, and analysts were quick to claim that the overnight plunge in the firm’s stock price was caused by an overall drop in demand for crypto.
Susquehanna Financial Group analyst Christopher Rolland said:
Jensen Huang, the CEO of Nvidia, suggested that the struggle of the company was largely affected by the bear market of crypto, stating “the crypto hangover lasted longer than we expected and we were surprised by that, but it will pass.”“While disappointing, the crypto-bubble is temporary, but secular growth opportunities like ray tracing and A.I. are not.”
Not Affected by Crypto
In the second quarter earnings call held in August, Nvidia firmly emphasized that GPU sales to crypto miners have substantially declined.
At the time, Nvidia CFO Colette Kress said that the company is no longer expecting any contribution from its cryptocurrency-focused venture.
“Our revenue outlook had anticipated cryptocurrency-specific products declining to approximately $100 million, while actual crypto-specific product revenue was $18 million. Whereas we had previously anticipated cryptocurrency to be meaningful for the year, we are now projecting no contributions going forward,” Kress said.
The market has been aware, for more than three months, that the cryptocurrency business of Nvidia has come to an end and that its CFO declared the company is not expecting any additional revenue from crypto-tailored GPU sales.
Still, many reports regarding the $23 billion drop in the market cap of Nvidia were focused on crypto rather than the company’s misjudgment in revenue forecasting, which CNBC Mad Money’s Jim Cramer said was the main factor of the drop.
“Nvidia still makes the best graphics chips, which have become more powerful than traditional microprocessors. It still has a lead over the competition in a lot of uses, although you could argue that AMD’s catching up to them in the data center while Intel rivals them in self-driving vehicles. I think Nvidia made an honest forecasting mistake, although given that some of us saw it coming, it was definitely an avoidable mistake,” Cramer said, adding that the company’s trend was coming from gaming.
Source: https://www.ccn.com/fake-news-nvidia-st ... ar-market/