Nvidia forecast beats expectations but crypto mining's role still unclear

NVIDIA Corp forecast second-quarter revenue above analysts' estimates on Wednesday, but 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 centre 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 towards purpose-built chips for mining.

Nvidia said those crypto-specific chips brought in US$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 US$400 million in the second quarter, the company said.

In an interview with Reuters, chief executive Jensen Huang said making gaming chips less suitable for miners helps keep them available for gamers.

"It effectively increases our production and supply" of gaming chips, he said.

Nvidia also said it still expects to close its US$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.

The company expects revenue this quarter of US$6.30 billion, plus or minus 2 per cent, compared with analysts' estimates of US$5.5 billion, according to IBES data from Refinitiv.

The company's total revenue was US$5.66 billion during the first quarter, beating estimates of US$5.41 billion, according to Refinitiv data. Adjusted profit was US$3.66 per share, above analyst estimates of US$3.28, according to Refinitiv data.

The company's closely watched data centre business, which has been eating away at rival Intel Corp's dominance in the segment, had revenue of US$2.05 billion, up 79 per cent year over year and above analyst estimates of US$1.88 billion, according to Refinitiv data.

Sales for gaming chips were US$2.76 billion, more than double the previous year and above estimates of US$2.47 billion, according to Refinitiv data. REUTERS