Why Investors Shouldn't Worry About NVIDIA's Underwhelming Quarter

Shares of NVIDIA Corporation NVDA are sliding after hours after the company’s EPS came in lower than Street estimates and underwhelming guidance. The company also cited weakness in demand for chips for cryptocurrency mining.

The stock is down about 7% and down more than 50% from its 52-week high of $346 a share. 

Weakness In Crypto Mining: “NVIDIA Says Quarterly OEM And Other Revenue Decrease Due To Decline In Cryptocurrency Mining Processor Revenue, Which Was Nominal In Quarter Vs $155M A Year Ago,” according to Benzinga Pro.

So, with Bitcoin BTC/USD below $30,000, Ethereum ETH/USD below $2,000, investors should be worried about demand for NVIDIA’s chips used to mine crypto, right? Well, not exactly. NVIDIA’s stock skyrocketed in 2016 and 2017 during Bitcoin’s first huge bull run as people rushed to buy NVIDIA chips to mine Bitcoin.

The First Bitcoin Crash: But, when Bitcoin crashed in late 2017, NVIDIA’s stock took a little hit, but it fared well even as Bitcoin remained in a bear market for the better part of two years. For long-term investors, seeing NVIDIA take a hit because of decreased crypto demand can be good in the long run. 

Now, if investors are not pricing in strong crypto demand, NVIDIA’s stock will not be reliant on the price of Bitcoin and how many people are mining crypto. Instead, the company can focus on its core market: gaming. In addition to gaming, NVIDIA’s technology will be used in robotics, AI, self-driving cars and more. All of these industries have less volatility and could have more promise than cryptocurrencies.