NVDA: OEMs indicate strong GPU demand for crypto

http://www.barrons.com/articles/nvidia-crypto-demand-for-gpu…

It seems graphics processing units, or “GPUs,” sales this quarter are doing better-than-expected, thanks to crypto-currency demand among those who use GPUs to “mine” bitcoin and other currencies.

However, demand may cool next quarter, thanks to bans on crypto, and also thanks to the shortage of DRAM:

Our checks with the leading GPU and motherboard OEMs indicate SepQ GPU card trends are very strong, with card shipments coming in ~30-50% ahead of flat q/q expectations on strength from cryptocurrency mining. Cryptocurrency demand is driving strength in NVDA’s GTX 1060/1070 cards. The GPU/motherboard OEMs also noted GPU pricing was up ~25% in the last six months. As we have noted prior (Link - Pricing), the strong pricing and unit trends point to strong OctQ upside to NVDA’s muted cryptocurrency expectations. The OEMs also noted zero inventory of GPUs in the channel and constrained short DRAM supply and pricing also affecting GPU shipments. Coming off a very strong SepQ, there are also expectations in the supply chain that DecQ GPU sales could be muted in pricing and demand on recent cryptocurrency bans and DRAM shortages.

The bolded text above is what Mizuho’s chip analyst Vijay Rakesh wrote.

I think NVDA will report revenue above guidance for their October quarter. Why?

  • Strong demand for GPUs from cryptocurrency mining. Bitcoin prices, despite a recent pullback, are still well above the average for last quarter.

  • Last quarter was a transition quarter with the launch of the new GPU Volta. I think some orders were delayed last quarter because the new chip just launched. The October quarter will be the first full quarter with Volta in the mix and I think data centers will be clamoring for it.

  • Last quarter cryptocurrency demand for GPUs cause some shortages in GPUs for gaming. I think there was probably pent up demand which probably got filled in the October quarter.

I think the above 3 will provide nice upside.

AMD’s quarter ends Sept 30th while NVDA’s ends at the end of October. AMD’s earnings result may provide us with some clues on how NVDA might perform.

Chris

2 Likes

If AMD is increasing its market share, that will be a short-term hit on Nvidia stock.

I don’t think the cryptocurrency bump is a long-term thing. There could be a crash in this market at any time, really.

What are the fundamentals in crypto? I don’t see any. I see two drivers - one is that it’s attracting a lot of speculation, and two is that people in certain circumstances need an alternate currency. Number two drives the price up when a bunch of people do this. Number one is where the bubble and crash will occur.