Please ensure Javascript is enabled for purposes of website accessibility

NVIDIA Inc. Expects Crypto-Related Sales to Crash in the Next Quarter

By Anders Bylund – Updated May 11, 2018 at 1:42PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Cryptocurrency-specific products scored huge sales growth in the first quarter, but those revenues should fall to one-third of those lofty levels in the next report.

On Thursday night, graphics chip giant NVIDIA (NVDA -0.66%) reported first-quarter results. Plunging demand from the cryptocurrency mining sector notwithstanding, the company delivered solid growth across the board.

Here's a closer look at the first quarter of NVIDIA's fiscal year 2019.

NVIDIA's first-quarter results: The raw numbers


Q1 2018

Q1 2017

Year-Over-Year Change


$3.21 billion

$1.94 billion


Net income

$1.24 billion

$507 million


GAAP earnings per share (diluted)




Data source: Nvidia.

What happened with NVIDIA this quarter?

  • NVIDIA found comfortable year-over-year growth in nearly all its reportable segments and target markets. Tegra processors saw a 33% revenue boost, while the larger graphics processing unit (GPU) division roared 77% higher.
  • Gaming sales rose 68% year over year, representing 54% of NVIDIA's total revenues. Data center revenues jumped 71% higher, and the OEM segment, which includes products specifically catering to cryptocurrency mining, surged 148% higher to land at $387 million ($289 million of that market's sales came from the crypto-specific products).
  • One eye-catching laggard was found in the automotive computing market, where revenues rose just 4% higher. This segment is going through a phase of modest growth but large behind-the-scenes platform expansion. According to comments made by CFO Colette Kress on a conference call with Wall Street analysts, the company now has more than 370 companies and research institutions working with NVIDIA's autonomous driving platform. These projects should lead up to real sales of market-ready products in due time, but it's a waiting game for now.

What management had to say

Cryptocurrency demand spiked in the first quarter, to the point where NVIDIA is taking steps to shield the gaming market from crypto miners gobbling up all their graphics cards. That being said, those sales are coming back down again in a hurry, according to Kress:

Cryptocurrency demand was, again, stronger than expected, but we were able to fulfill most of it with crypto-specific GPUs, which are included in our OEM business at $289 million. As a result, we could protect the vast majority of our limited gaming GPU supply for use by gamers. Looking into Q2, we expect crypto-specific revenue to be about one-third of its Q1 level.

A highway marked with the word Cryptocurrency rises into the sky, ending in a huge question mark. On the blacktop, a man in a red shirt quietly considers the riddles ahead.

Image source: Getty Images.

Looking ahead

NVIDIA's management offered the following guidance targets for the second quarter:

  • Top-line sales should land near $3.1 billion, roughly 40% above the year-ago period.
  • GAAP gross margins are moving toward 63.3%, down from 64.5% in this first-quarter report, but up from 58.4% in last year's second quarter.
  • On the bottom line, GAAP earnings are projected to continue their 151% year-over-year gains at approximately $1.98 per diluted share.

These targets include the plunging view of crypto-related sales but assume that the huge popularity of first-person shooters Fortnite and PlayerUnknown's Battlegrounds will stay strong. That sounds like a reasonable assumption.

Over the long run, NVIDIA sees its addressable data-center markets expanding from $30 billion in 2020 to at least $50 billion by the year 2023, driven by rising demand for artificial intelligence and data analysis tools.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Nvidia. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

NVIDIA Corporation Stock Quote
NVIDIA Corporation
$121.39 (-0.66%) $0.81

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.