Cryptocurrency Hangover weighs on Nvidia

The company said Thursday its third-quarter profit jumped 47 percent and its sales by 21 percent fell short of Wall Street's expectations. Nvidia's outlook for the fourth quarter was also disappointing. Investors jostled the title, sending it to $ 202.00 after normal closing hours.

Nvidia manufactures graphics chips used in video game consoles and data centers. More recently, its hardware has become popular with users of virtual currencies, which requires intense computing power. Chief Executive Officer Jensen Huang has blamed lower cryptocurrency prices, which has resulted in lower demand for its processors used in mining.

"The encrypted hangover lasted longer than expected," he said when calling the company's results. "It's surely a setback, and I would have liked that we saw it earlier."

The company records cryptographic sales in the OEM segment. In the most recent period, OEM and IP revenues declined 23% to $ 148 million.

Nvidia has been one of the most advanced players in technology, with its share price having increased 10-fold between early 2016 and this fall, from around $ 27 to a high of about $ 280. But he has been involved in the wider technology sales since; before announcing its results, its shares were down more than 25% from their peak.

Stacy Rasgon, an analyst at Bernstein Research, said the shortfall is a stain, but likely temporary until Nvidia has better inventory management. "I do not think that derails, but I think it removes a little air," said Rasgon about the title.

The profit reached $ 1.23 billion. Excluding stock-based compensation and other items, adjusted earnings were $ 1.84 per share. Revenues reached $ 3.18 billion. Analysts expected an adjusted profit of $ 1.93 per share and a business figure of $ 3.24 billion.

Gross profit margins improved to 60.4% from 59.5% a year earlier.

Nvidia's forecast for the current quarter has shocked Wall Street. The company was forecasting revenue of about $ 2.7 billion, up from $ 2.91 billion a year ago.

The revenue forecast reflects an expected reduction in its mid-range Pascal game cards and a seasonal decline in its gaming console activity. Pascal processors are also used by minor crypto. Nvidia expects to return to normal inventory by the end of the fourth quarter, analysts said the chief financial officer, Colette Kress. According to Ms. Kress, mid-range computers account for about one-third of Nvidia's gaming activity.

Gambling revenue increased 13% to $ 1.76 billion, while revenue from the growing data center segment reached $ 792 million, up 58%. Both, however, did not respond to analysts' forecasts.

Write to Eliot Brown at [email protected] and Maria Armental at [email protected]