Semiconductor shortage. Intense interest in cryptocurrencies. Record annual earnings and earnings. All of that sounds familiar to Nvidia Corp. NVDA, + 2.52%, which soared to records in 2018 amid chip shortages and demand from cryptocurrency miners, before returning to earth with a thud in 2019. With a stellar 2020 topping the 2018 performance record, thanks to some of the same dynamics, it‘s fair to wonder if Nvidia will once again end a period of intense demand with oversupply.
CFO Colette Kress tried to allay those fears Wednesday. “The market feels very different than it did before,” Kress said in an interview with MarketWatch after the chip designer revealed more than $ 5 billion in quarterly revenue for the first time. Kress said that Nvidia is better prepared for a potential increase in demand from crypto miners, as it now offers a specific graphics card designed just for crypto mining. Last week, it unveiled a specialized card and chipset for crypto-miners, and unveiled features for its upcoming RTX 3060 card designed for video games that would slow down the system if the cards were used to mine digital currency. “The industry is developing,” Kress said, referring to the cryptocurrency market, adding that more industries are starting to embrace it. He also noted that, in the case of Nvidia, the company has an “installed base of existing mining machines that were likely rebooted or placed on the general market for mining.” She predicted that sales from her cryptocurrency mining processor, or CMP, will be around $ 50 million in the current quarter. CMP is designed to mine ethereum ETHUSD, + 1.35%, a much lower cost digital currency than bitcoin BTCUSD, + 3.38%. However, there are more concerns beyond crypto demand. Nvidia has struggled to supply enough product amid an ongoing semiconductor shortage that prompted President Joe Biden to sign an executive order earlier in the day, directing a review through federal agencies to address vulnerabilities in supply chains. supply. For More Information: The global chip shortage is expected to last into next year, and that’s good news for semiconductor stocks The shortage, combined with a memory of crypto glut that marred Nvidia and Advanced Micro’s financial results. Devices Inc. AMD, + 2.60% Two years ago, investors were a bit worried and Nvidia shares fell more than 2% in after-hours trading. The executives emphasized that they are doing everything they can to supply customers while avoiding oversupply at the heart of 2019’s woes. When asked about the company’s growing data center business, With revenues soaring 97% in the quarter, Kress said Nvidia’s data center customers should be in touch with the company about their needs and planning, and there should be no problem in getting it. supply. “We are planning for growth and demand as we move forward,” Kress said. “We will probably be limited in supply for some time.” Nvidia had a phenomenal 2020, and investors should view its connection to cryptocurrencies as a positive as more companies accept bitcoins and are rewarded by Wall Street, from Square Inc. SQ, -7.51% to Tesla Inc. TSLA, + 6.18 %. Investors will have to hope that Nvidia executives learned their lesson last time and take the appropriate steps to manage supply and demand issues this time.