Nvidia has always blamed their financial woes as the decline in cryptocurrency mining-related demand in the past, it acknowledged that it’s baby, the gaming industry, has posted a significant problem. The chipmaker dropped their guidance to $2.2 billion from $2.7 billion, and this news sent its share price into a tailspin.
Nvidia blamed the weaker-than-forecasted sales of their gaming and data center platforms for the guidance cut. This growth has gone further down in China and macroeconomic issues have caused the revenue to drop.
Nvidia’s founder and CEO Jensen Huang isn’t someone who would mince his words. During a statement on the lowered guidance. Huang said- “deteriorating macroeconomic conditions, especially in China, are the reason why consumer demand for NVIDIA gaming GPUs. has reduced. Q4 has been an extraordinary, unusually turbulent, and disappointing quarter. Looking forward, we seem more confident in our strategies and growth drivers. The foundation of our business is extremely strong and more evident than ever, the accelerated computing model NVIDIA has pioneered and it is the best path forward to serve the world’s insatiable computing needs. The markets which we have been creating, gaming, design, HPC, AI a, d autonomous vehicles – are essential and will grow to be very large. We have excellent strategic positions for all of them.“
Previously, it was reported that the chipmaker shelved its focus on processor chips so as to focus on the cryptocurrency mining market. It has also started looking at robotics and artificial intelligence for future success. Toward this end, the firm has also opened a 13,000 sq. ft. robotics research lab in Seattle. The lab would have 20 roboticists and 30 academic experts.
On the other hand, they have been dealing with a class action lawsuit as well. Nvidia had been accused of giving misleading statements regarding the impact of reduced cryptocurrency mining-related demand on their revenue projections.
Nvidia had been one of the best-performing stocks in 2017 as crypto miners. Jim Cramer weighed in on Nvidia’s predicament. He said that in Q3 fiscal 2019, Nvidia had indicated that gaming would be bigger than crypto. [Nvidia] couldn’t handle how much [cryptocurrency] inventory they actually had.
Cramer said that this news would affect all players in the gaming space.
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