(Reuters) — Nvidia shares fell as much as 5 percent in after-hours trading on Thursday after the chip maker said cryptocurrency-fueled demand had dried up and it forecast sales below Wall Street targets, overshadowing quarterly results that otherwise beat expectations.
The company’s bleak outlook for cryptocurrency chips was a sharp reversal from the prior fiscal quarter, when sales to so-called miners of digital currencies such as bitcoin and ethereum amounted to $289 million, nearly a 10th of Nvidia’s revenue. Nvidia previously had forecast sales for cryptocurrency chips for the fiscal second quarter ended July 29 of about $100 million. On Thursday it reported actual revenue of only $18 million.
“We benefited in the last several quarters from an unusual lift from crypto,” CEO Jensen Huang said on a conference call with analysts, “but at this time, we consider it to be immaterial for the second half” of the fiscal year.
It projected third-quarter revenue of $3.25 billion, plus or minus 2 percent, falling short of analyst estimates of $3.34 billion, according to Thomson Reuters I/B/E/S.
Ahead of a conference call with analysts, shares were down 3.6 percent to $248, still quadruple their value two years ago. Shares of Nvidia’s chief rival in the graphics chip market, Advanced Micro Devices Inc (AMD.O), have also been whipsawed by swings in the cryptocurrency markets.
Analysts were troubled by Nvidia’s gross margin forecast of 62.8 percent, slightly below expectations of 62.9 percent and possibly a result of putting more memory modules on its chips.
Analyst KinNgai Chan of Summit…