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

NEW YORK: Nvidia forecast second-quarter revenue above analysts' estimates on Wednesday, but shares fell 1 per cent 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 rigs boomed through the pandemic, helping further boost sales after several years of rapid growth for data centre chips for 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 better separate out 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.

In a release, Chief Executive Jensen Huang said the company continues "to make headway" with its planned US$40 billion acquisition of British chip technology firm Arm Ltd, a deal that Nvidia has said will close in March 2022 but has drawn scrutiny from regulators in the United States and Britain and also needs approval from European and Chinese authorities.

The company expects current-quarter revenue 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 center 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.

"We believe gaming also benefited from cryptocurrency mining demand, although it is hard to determine to what extent," Nvidia Chief Financial Officer Colette Kress said in a statement.

Nvidia's shares were down 1 per cent at US$621.95 in extended trading on Wednesday.