Nvidia’s data to be released on Wednesday will hide cryptocurrency mining chip revenue. Investors will need to keep a close eye on this total.
The reason is simple: the price of cryptocurrencies goes up and down, making it difficult for deal miners to meet the demand for the chips they need.
And Nvidia (ticker: NVDA) has been burned by cryptocurrency price declines in the past.
Perhaps most importantly, it redesigned its chips for video games. Then it started producing versions for miners.
Nvidia booked the new chips as cryptocurrency revenue because it can’t be sure exactly how many video game chips were used for mining.
Colette Kress, the company’s chief financial officer, expects cryptocurrency chip sales to reach $400 million in the second quarter, more than double the $155 million in the first quarter.
The consensus for chip mining sales rose to $537.5 million from $327 million in the first quarter.
As with other companies’ results, investors are hoping that the actual figures will at least match or exceed Kress’ expectations.
Ambrish Srivastava, an analyst at BMO Capital Markets, gave some estimates on the actual size of Nvidia’s mining business – the new chips that will be added to its video game chips.
Srivastava estimates cryptocurrency revenue at $450 million in the second quarter, which is not far off the company’s forecast.
For the first quarter, Srivastava forecasts $650 million, which is well above the $155 million that Nvidia reported for mining chips alone.
Investors should wait until Nvidia and Srivastava reveal the numbers so they can see how exposed the company is to the volatile price of cryptocurrencies.
Two years ago, the drop in cryptocurrency prices caused Nvidia’s revenue to fall by nearly a third for four consecutive quarters.
The rest of the quarter is fairly typical. The consensus forecast calls for revenue of $6.3 billion and adjusted earnings per share of $1.01.
Investors should also keep an eye on the data center sector.
The company’s CEO, Jensen Huang, talked about the demand for data center GPUs, which are often used for artificial intelligence and machine learning tasks.
Wall Street expects data center revenue to grow about 30 percent to $2.3 billion.
The core video game chip business is expected to grow 80 percent to $3 billion. The CEO’s comments on the ongoing global chip shortage are noteworthy.
According to Srivastava, the expected increase in supply has not materialized.
Nvidia shares fell 2.5 percent to $194.58 in Tuesday’s session, but are up 48 percent so far this year. The benchmark PHLX Semiconductor Index is up 16 percent through 2021.
The stock was up 0.3 percent in pre-session trading Wednesday.
By ezphoto / shutterstock.com