Market Overview

Analyst: Bitmain's New Ethereum Mining Chip Could Spell A Little Bit Of Trouble For AMD And Nvidia

Share:
Analyst: Bitmain's New Ethereum Mining Chip Could Spell A Little Bit Of Trouble For AMD And Nvidia
Related AMD
The Chips Are Down: Weak Forecasts Hurt Semiconductor Stocks
Friday Follies: Brexit, Semiconductor, And Tariffs All Take Center Stage
Buy Nvidia: The Bull Thesis Is Still Intact (Seeking Alpha)
Related NVDA
55 Biggest Movers From Friday
Nvidia Gets Burned On Earnings: This Chart Shows More Pain Ahead
Buy Nvidia: The Bull Thesis Is Still Intact (Seeking Alpha)

Bitmain officially announced its highly anticipated application-specific integrated circuit (ASIC) for cryptocurrency mining. The company said the new ASIC will hit the market in July, and it could be bad news for the GPU sales of Advanced Micro Devices, Inc. (NASDAQ: AMD) and NVIDIA Corporation (NASDAQ: NVDA).

Why It's Important

The new ASIC will likely single handedly bring an end to the GPU supply shortage, according to Morgan Stanley analyst Joseph Moore.

“The superior economics [of the ASIC] is likely to drive down mining profits for graphics chips (which were already under pressure), and likely signal the end of the crypto graphics shortage by mid year, a tactical negative for AMD (and to a lesser extent NVDA), though both companies have other areas growing quickly,” Moore wrote in a note on Wednesday.

Earlier this week, Moore said falling Ethereum prices, which dipped to around $370 last week after peaking at nearly $1,300 in January, are already reducing GPU demand. The price of an AMD Radeon 580 is down from $530 to $399 on Amazon, while the price of a Nvidia GeForce 1060/6 GB is down from $500 to $399.

Moore said the new Bitmain ASIC will be able to generate roughly $6.26 per day in revenue from cryptocurrency mining compared to only about 83 cents per day for the R580 graphics card chip. The ASIC will be priced at about $800 and will be capable of a hash rate 7.5 times that of the leading graphics cards.

What's Next

In light of the new ASIC competition, Morgan Stanley says investors should be cautious when it comes to Nvidia and AMD shares.

Morgan Stanley has an Underweight rating and $8 price target for AMD, along with an Equal-Weight rating and $258 price target for Nvidia.

AMD was down 4 percent shortly after Wednesday's opening bell, while Nvidia was down about 3.7 percent.

Related Links:

AMD, Nvidia Cut GPU Prices As Crypto Slump Saps Demand

Bank Of America Adds Nvidia To Top Stock List After Latest Gaming Checks

Latest Ratings for AMD

DateFirmActionFromTo
Oct 2018BairdMaintainsNeutralNeutral
Oct 2018BMO CapitalMaintainsMarket PerformMarket Perform
Oct 2018BarclaysUpgradesUnderweightEqual-Weight

View More Analyst Ratings for AMD
View the Latest Analyst Ratings

Posted-In: ASIC BitmainAnalyst Color Cryptocurrency Top Stories Markets Analyst Ratings Tech Best of Benzinga

 

Related Articles (NVDA + AMD)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
BBCIBCUpgrades0.0
BKNGWells FargoUpgrades0.0
DARJP MorganUpgrades25.0
EEXBarclaysDowngrades12.0
HPCredit SuisseUpgrades65.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

TriNet's Risk-Reward Is Balanced, Morgan Stanley Says In Upgrade

Trade Fears Dominate As China Announces New Tariffs Against U.S. Products