Nvidia Corp (NVDA) forecast second-quarter revenue above analysts’ estimates on Wednesday, but shares fell 1% after-hours as the company could not say for certain how much of its recent revenue rise was driven by the volatile cryptocurrency-mining market.
Demand for Nvidia graphics chips for video gaming boomed through the pandemic. This added several years of rapid sales growth for data center chips used in artificial intelligence applications such as image recognition.
But on Wednesday investors again seemed put off by a surge in purchases of Nvidia chips for cryptocurrency mining, which tends to occur when the value of the currencies rises. To distinguish volatile demand for crypto-mining chips from its other more stable business lines that investors are tracking closely, Nvidia has tried to use technical changes to steer miners away from its gaming chips and toward purpose-built chips for mining.
Nvidia said those crypto-specific chips brought in $155 million in its first quarter. The company said crypto miners also gave its much larger gaming chip segment a boost but it was not sure by how much. Crypto-specific chip sales are expected to rise to $400 million in the second quarter, the company said.
Nvidia also said it still expects to close its $40 billion deal to purchase British chip technology firm Arm Ltd by March 2022. The deal has drawn scrutiny from regulators in the United States and Britain and also needs approval from European and Chinese authorities.
Nvidia expects revenue this quarter of $6.30 billion, plus or minus 2%, compared with analysts’ estimates of $5.5 billion, according to IBES data from Refinitiv.
Nvidia’s total revenue was $5.66 billion during the first quarter, beating estimates of $5.41 billion, according to Refinitiv data. Adjusted profit was $3.66 per share, above analyst estimates of $3.28, according to Refinitiv data.
Nvidia’s closely watched data center business, which has been eating away at rival Intel Corp’s (INTC.O) dominance in the segment, had revenue of $2.05 billion, up 79% year over year and above analyst estimates of $1.88 billion, according to Refinitiv data.
Sales for gaming chips were $2.76 billion, more than double the previous year and above estimates of $2.47 billion, according to Refinitiv data.
Nvidia on Friday announced a four-for-one stock split as it looks to make its stock less expensive for investors.
Nvidia’s stock, which was last up to at over $600 in trading, has gained nearly 12% this year after its value more than doubled in 2020.
Stock splits can potentially attract retail investors who make small trades. However, as brokerages increasingly allow customers to buy parts of shares, the benefit of share splits appears to have diluted over time.
If approval is obtained, each NVIDIA stockholder of record at the close of business on June 21, 2021, will receive a dividend of three additional shares of common stock for every share held on the record date, to be distributed after the close of trading on July 19, 2021. Trading is expected to begin on a stock split-adjusted basis on July 20.
Nvidia Long (Buy)
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