Nvidia Delivered But Its Crypto Product Fell Short

On Wednesday, Nvidia NVDA reported its second-quarter earnings and succeeded in beating Wall Street estimates on the back of strong graphics card sales. However, its cryptocurrency chip product, CMP, had lower sales than Nvidia itself had predicted in May. Still, shares were up 2% upon the results.

Q2 Figures

For the quarter that ended on August 1^st, Nvidia generated a record $6.51 billion in revenues, exceeding the expected $6.33 billion. Revenue rose 68% annually whereas, in the previous quarter, sales grew 84%. Adjusted earnings amounted to $1.04, exceeding expectations of $1.01.

Graphics Segment

The segment which is primarily made up of graphics cards grew 87% to $3.91 billion or more descriptively, faster than the compute and network segment, which includes chips for data centers, which grew 46% to $2.6 billion.

Gaming Market

When it comes to markets, gaming was one of the highlights, its sales went up 85% compared to last year and reached $3.06 billion. This increase is owed both to GeForce graphics card sales and the chips it sells to game console makers, such as the processor which is at the heart of the Nintendo Switch.

Data Center Business

Due to graphics cards for data centers, both industrial use and among cloud providers, this business also hit an all-time high as it grew 35% annually to $2.37 billion.

Professional Visualization

The segment that consists mostly of graphics cards for high-end professional workstations went up 156% annually to $519 million. Its automotive business remains a small portion of the company's sales, with sales of $152 million, down sequentially from the previous quarter but up 37% from last year's respective quarter that was shaped by the global pandemic that halted auto production.

CPM Fell Short

The company's new Cryptocurrency Mining Processor (CMP), the dedicated chips it makes for cryptocurrency mining, failed to hit Nvidia's own predictions. It reported $266 million in cryptocurrency card sales, as opposed to $400 million it predicted, making the prediction 33% off. CMP sales were likely impacted by China's cryptocurrency crackdown as miners were selling off used graphics processing units.

Nvidia says its cryptocurrency cards are an effort to ensure there is sufficient chip supply for gamers and it applied software to its GPUs to prevent them from mining cryptocurrencies. Going forward, Nvidia's CFO, Colette Kress, expects a "minimal contribution" from CMP sales.

Supply Challenges

Supply issues that began late last year are still in the air, as Nvidia's latest line of graphics cards has remained mostly sold out in stores and it was seeing longer lead times throughout its supply chain. But this is not a surprise as the company announced back in May that it expected supply issues to persevere throughout the second half of the year. This time around, it revealed it expects GPU supply constraints for the ‘vast majority' of 2022 as well.

Outlook

For the undergoing quarter, Nvidia expects $6.8 billion in revenue exceeding Refinitiv expectations of $6.5 billion. The company is in a period of sustained, massive growth in its business as semiconductors are in short supply across the globe while the demand for the kind of processors it specializes in is skyrocketing. Not surprisingly, over the last year, its shares are up over 57%. Its crypto business didn't perform as expected, but Nvidia is doing just fine.

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