Nvidia NVDA 1.03% has long understood that the cryptocurrency business is one of easy come, easy go. But the last part still smarts a little.
The chip maker began experiencing a run on its graphics processors last year, as booming value of cryptocurrencies such as Ethereum sparked a rush to build devices to “mine” said currencies. But that demand has fallen off sharply, as specialized crypto-mining chips made their way to the market—just in time for a collapse in cryptocurrency values. Nvidia said sales of crypto-specific products totaled just $18 million for its second fiscal quarter ended July 29, down from $289 million in the previous period.
That colored the company’s outlook issued Thursday with its second-quarter results. Nvidia projected revenue of $3.25 billion for the third quarter, which was about 3% shy of Wall Street’s estimates. The company said it now assumes no crypto-related sales going forward. Nvidia’s shares slipped 4% after hours following the report, after having run up 33% this year already.
Investors should take the change in stride. Crypto was never going to be a stable long-term business for Nvidia. And its impact is small relative to the company’s much larger—and better-performing—endeavors. The company’s flagship gaming segment posted a 52% year-over-year jump in revenue to a record $1.8 billion, while revenue for data centers, a far more important new business for Nvidia than crypto, surged 83%, accelerating from the previous quarter to $760 million.
Both key segments beat Wall Street’s already generous forecasts for the period. And Nvidia’s outlook still projects strong double-digit growth ahead. Crypto was a nice boost while it lasted, but investors are better advised to see the bigger picture.