Wells Fargo Securities has reduced its predictions for the Nvidia Chip, citing the dip in the price of Ethereum as the primary reason.
According to Wong,
We think that falling demand for GPUs (graphics processing unit) used in cryptocurrency mining could impact Nvidia’s July 2018 and subsequent quarters.
Ethereum experienced an increase of 700 percent within the last 12 months.
There are reports from a Wall Street firm regarding the demand for Nvidia chips. According to the report, the chips will suffer because of diminishing digital currency mining demand this year.
Nvidia Responds to Negative Prediction
In recent months… we felt that there were multiple risks associated with Nvidia’s exposure to cryptocurrency mining and our concerns over the sustainability of Nvidia’s gaming, automotive and datacenter growth.
This statement was delivered during his address to clients on Sunday with a note titled “We See A Significant Rise in Risk”. He further highlighted, “In the last few weeks cryptocurrency prices have dropped significantly; we are trimming our below-consensus EPS and revenue estimates”.
A day after this report was made, the shares of Nvidia dropped to 4.6 percent. Wong echoed this rating on Nvidia shares with his $100 price target, which is a representation of the 57 percent downturn at Thursday’s close.
Cryptocurrency miners utilize graphics cards based on Nvidia’s and AMD’s chips to “mine” new coins, which are later sold or held for future increases. Ethereum experienced an increase of 700 percent within the last 12 months. Nevertheless, it experienced a 70 percent dip from its January high as reported by Coinbase data.
Because of this, the 2019 fiscal earning per share of Nvidia was predicted to reduce from $5.39 to $5.32. According to Wong, “We think that falling demand for GPUs (graphics processing unit) used in cryptocurrency mining could impact Nvidia’s July 2018 and subsequent quarters.”
All efforts to gather more information from Nvidia have proven to be to no avail, as no one has been willing to provide additional comment regarding this issue.
Ethereum is not the only cryptocurrency that has suffered a significant price drop this year. Virtually all cryptos have struggled to retain their old prices since the dawn of 2018. Bitcoin managed to get above $10,000 but has since hovered at around the $6,000 to $9,000 mark.
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