Opinion: Crypto boom is just the icing on top of a sweet year for Nvidia

Nvidia Corp. is heading towards such a fantastic year that a crypto-focused service possibly on a more-than-$1 billion yearly run rate is viewed as simply additional icing on the celebratory cake.

blew past Wall Street approximates Wednesday with record quarterly profits of $5.66 billion, 84% greater than the previous year. Its 2 core organizations both knowledgeable big development — video gaming sales rose 106% to $2.76 billion and data-center profits increased 79% to $2.05 billion.

With players fighting to purchase whatever equipment they can get their hands on in the middle of a semiconductor scarcity, Nvidia anticipates the development to continue. Chief Financial Officer Colette Kress projection profits of $6.3 billion for the 2nd quarter at the midpoint, development of around 63% that would result in yet another record sales quarter.

The greatest development might be in crypto, nevertheless. Nvidia introduced crypto-mining-specific graphics cards in an attempt to avoid the cycle of boom-to-bust the last time its products were adopted en masse by miners, and sold $155 million worth last quarter, three times as much as Kress projected in the last earnings report.

In an interview with MarketWatch on Wednesday, Kress confirmed a forecast for more than twice that much — $400 million in sales in the current quarter — while stressing that Nvidia’s focus is on supplying the needs of its core consumer customer, gamers.

“We have a market that will not interfere with the supply for GeForce,” Kress said, referencing Nvidia’s gaming cards. “If [cryptocurrency-mining processors] went away or if crypto mining went away, it would be fine with us, we have some amazing core businesses.”

In other words, a business with annualized sales of more than $1 billion would be just a luxury for Nvidia, which would have sold more chips if it had more supply, across the board. “As we move to the second half of year, we will hope that we can get more in line with where demand is,” Kress said.

The success was also thanks to its data-center sales. “Hyperscale” data-center customers like Amazon.com
are buying the company’s graphics processors for their artificial-intelligence capabilities, and Kress said Nvidia’s data-center offerings could find new orders after a refresh during the pandemic.

“As things open up, there is a lineup of products that we have launched that are in their super early days,” she said.

The revenue-development rate might slow a bit as Nvidia laps the closing of its Mellanox acquisition from April 2020, Kress noted, while worrying that “Growth is still there, both sequentially and from a year-over-year perspective.”

The only potential sour taste lies in doubts about the company’s still-pending $40 billion acquisition of ARM Holdings Plc, which is under regulatory review in the United Kingdom. While Kress stated the company cannot comment on the review process, she noted that Nvidia is working with regulators to inform and help them understand the transaction. She said the company still believes the deal is on track to close in early 2022.

It may be hard for Nvidia’s stock to appreciate from here, after a strong move in the wake of its stock-split news last week left it simply shy of all-time highs; in after-hours trading, shares of Nvidia, which are up almost 80% in the previous year, slipped around 1%. The other numbers associated with Nvidia are spectacular, nevertheless.

Jobber Wiki author Frank Long contributed to this report.