While the broader market is having a tough year, crypto investors are faring even worse. With two staples of the cryptocurrency market, Bitcoin and Ethereum, each down around 65% from their all-time highs set in November, it's been a difficult go for anyone invested in crypto.

However, this market weakness has had a larger ripple effect. Crypto miners aren't nearly as profitable, and many people are shutting their rigs down due to high input costs (electricity). If miners are shutting existing resources down, they certainly aren't purchasing any new graphics process units (GPUs) to increase capacity.

This spending drop is where the GPU market leader, Nvidia (NVDA -4.35%), comes in. Nvidia makes GPUs for multiple purposes: gaming (the same devices used to mine crypto), data centers, and self-driving cars. However, with the drop in crypto demand, investors are worried about the potential revenue hit the company will see.

While this is a valid concern, I think investors need to dig deeper to truly understand why Nvidia will be able to shrug off this headwind.

2018 flashbacks

Part of the reason why investors are worried about Nvidia is that this isn't the first time a crypto crash has happened. In the last quarter of 2017, Bitcoin prices practically quadrupled and then crashed, and the crypto lost half its value in the next quarter.

This story echoes the rise and fall Bitcoin investors have experienced over the last year. But how was Nvidia affected?

Because the company got caught up in the crypto-mining euphoria, it ordered too many GPUs and had a supply glut. As a result, Nvidia had to slash prices, which caused revenue to fall.

NVDA Revenue (TTM) Chart.

NVDA Revenue (TTM) data by YCharts.

Digging in a bit deeper, before the crash during the third quarter of its 2019 fiscal year (ended October 28, 2018), Nvidia's revenue distribution looked like this:

Division  Q3 FY19 Quarterly Revenue (Millions of Dollars) Percentage of Total Revenue
Gaming $1,764 55.5%
Professional Visualization $305 9.6%
Data Center $792 24.9%
Auto $172 5.4%
OEM & Other $148 4.6%

Source: Nvidia.

Over-reliance on one division can spell disaster for a company if that division runs into serious headwinds. In the next quarter, gaming revenue dropped to $954 million, a 45% year-over-year (YOY) and a 46% quarter-over-quarter drop.

However, Nvidia isn't the one-trick pony it used to be.

Nvidia is more diversified now

Fast forward to today's values, and Nvidia is much more balanced. During its Q1 of FY 2023, Nvidia's revenue distribution looked like this:

Division  Q1 FY23 Quarterly Revenue (Millions of Dollars) Percentage of Total Revenue
Gaming $3,620 43.7%
Professional Visualization $622 7.5%
Data Center $3,750 45.3%
Auto $138 1.6%
OEM & Other $158 1.9%

Source: Nvidia.

Because of the data center division's rapid rise (up 373% since Q3 of FY 19), Nvidia has another revenue stream to lean on if gaming takes a hit. Additionally, this segment has enormous tailwinds, as all major data center providers utilize its product. Management is guiding 70% YOY growth for this segment in Q2, which will help drive the overall guidance of 25% growth.

Part of the reason for the low guidance is management's lack of visibility in the crypto space. Because these GPUs can be used for multiple purposes, it won't know how much the crypto demand evaporation affected its results. As a result, management was likely conservative with its projection.

Still, 25% growth may not cut it for a company trading at 49 times earnings. However, considering forward earnings (which uses projections), Nvidia trades for a much more reasonable 34 times earnings.

Investors will learn more about Nvidia's current state during its Q2 conference call on August 24. However, with the stock down around 45% from its all-time high, any glimmer of good news will likely be a positive catalyst for the stock. As a result, I think Nvidia is a solid buy here, as the long-term tailwinds are still blowing in favor of its data center division.