Crypto interest and mining have diminished, and the last quarter of both Nvidia and AMD have revealed that, and it caused Nvidia stock to drop down from $203 all the way down to $138.45, and then slightly recovered to $149.08 at press time.
In February 2016, not so long ago, Nvidia was trading for $26 to finish the year worth over $103. This was all driven by two big promises, the prosperity of AI and Nvidia Automotive – self driving aspiration. This was all based on the rock solid gaming market where Nvidia dominates its competitors.
Then the crypto madness happened, causing Nvidia and AMD to sell record high GPU shipment for record profits, mostly to miners. Even then, it was obvious that the madness backed up mostly by thin air would stop at some point.
What surprises us is that after twenty years of following Nvidia that the financial community still doesn’t get it. Jensen does promise a lot but Nvidia manages to deliver too. Crypto is something that no one really controlled and despite the fact that it caused Nvidia and AMD to sell a lot of GPUs, it collapsed with very little warning dragging both companies stock with it.
Nvidia's role in AI revolution
Nvidia is not singlehandedly winning the AI battle, but Jensen, as a great marketeer, wants you to think so. To give it the credit it deserves, it was one of the first to realize the importance of AI and invested a lot in the software and hardware component to make fastest AI accelerators.
Many companies are strongly benefiting and on the training side, besides Nvidia, IBM, Intel and latterly Xilinx, are the key large benefiters from the revolution. If you pay attention, every Nvidia DGX system has Intel Xeon CPU inside and IBM is using Nvidia hardware in its Power 9 systems. Lately, Dell and some other key players started using Xilinx Alveo cards for its training data center driven machines.
Another key point for Nvidia's growth is automotive. Nvidia is far ahead with its self-driving system that will lead to self-driving robo taxis in a few years. There will be a lot of competition in this area but Nvidia is still strong with some massive pressure from Cruz/GM/Google as well as Qualcomm and Intel/MobileEye.
Last but not least is gaming. Nvidia still has the fastest solutions for gaming around. The previous Pascal based 1080 generation was great and the 20-series with its RTX Ray tracing approach is a step in the right direction. The cards are expensive but so are Apple’s phones and people still buy them. Since AMD doesn’t have anything to compete with the RTX series, Nvidia ended up pricing the card as high as it could, in order to gain profits. That is the task of any single stock market publicly listed company, to increase revenue and especially profits and earnings per share (EPS) to please the money community.
The bottom line is that Nvidia should not suffer so much for the drop in Crypto. It was always meant to be, it has happened, and it will happen again. There is almost no doubt that Crypto market will rise again to end up with the same fate again.
Again, here's a slight criticism of the financial community. Whether Nvidia stock deserved to jump from $30ish to $200 is questionable to begin with, but downing them for the end of what was unavoidable leaves us puzzled.
Just wanted to share our analysis over what happened last week and offer potentially a different angle to the matter.