Nvidia Couldnt Wait To Break The Bad News To Investors

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What's going on?

Chipmaker Nvidia gave a far worse-than-expected earnings preview earlier this week.

What does this mean?

Nvidia isnt due to give its official quarterly earnings update until later this month, but things seem so bleak that itd rather let the cat out the bag sooner rather than later. The chipmakers expecting its second-quarter revenue to come in around $6.7 billion a 19% drop from the quarter before, and well below the $8.1 billion it previously predicted. It put that down to its gaming division: Nvidias expecting its second-quarter gaming revenue which accounted for almost 60% of its sales last year to be 44% lower than the quarter before, and a third less than the same time in 2021. Investors certainly werent playing games: they sent Nvidias shares down 6% after the announcement.

Why should I care?

Zooming in: Was it really gaming, though?
Youd be forgiven for thinking that gamers have just been turning off their consoles, but there could be something else at play. Nvidia was fined by US regulators back in May for attributing a huge boost in revenue to its gaming segment, even though a lot of those high-spec chips were actually going to crypto miners. So its probably no coincidence that the segments sales have dropped off just as the prices of bitcoin and ether and in turn the potential rewards from mining are down by over 50% this year.

The bigger picture: This could be just the start.
Nvidia can categorize its crypto mining chips however it likes: its not going to change the fact that Ethereum is doing away with mining altogether on September 12th in one of the biggest events ever seen in the crypto world. Thatll wipe out a huge source of demand in one fell swoop, and could take the chipmakers revenue along with it.

Originally posted as part of the Finimize daily email.

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