Nvidia stock took a beating in after-hours trading on Thursday, after the company shared [PDF] its Q1 results and guidance for Q2 expectations. Investors were seemingly not happy with 4% lower than expected revenue for 2Q ($8.1 billion); $500 million of which Nvidia attributed to the Russian-Ukranian conflict and COVID-19 lockdowns in China.
Perhaps more telling, however, is the reduction in Nvidia's CMP (Cryptocurrency Mining Processor) cards' revenue, which the company introduced into the market as a way to lure cryptocurrency miners away from gaming-oriented GeForce cards.
Following the downturn in the cryptocurrency market and macroeconomic / geopolitical events, alongside increasing odds of Ethereum's Merge event, revenue from CMP cards has been declining at a breakneck pace, showcasing the fickleness of blockchain-related demand. From $266 million in Q2 2021, CMP revenues declined to $105 million in Q3, ending in a comparatively measly $24 million for Q4 2021, further falling in Q1 2022 towards an unspecified, "nominal" value, according to Nvidia. As per usual, Nvidia states that it can't accurately forecast how much of its gaming GPU revenue comes from cryptomining.
The stock fall happened despite strong QoQ (quarter-over-quarter) results for the green giant. Buoyed by its bread and butter markets, Nvidia posted an 8% increase in quarterly growth for 1Q2022 alongside a 3% increase in earnings per share to $1.36 compared to Q4 2021.
Nvidia's gaming segment registered an impressive 31% growth YoY - which the company even gloated about, claiming gamers were spending $300 more on new GPU technology, on average. But considering the ongoing back and fort between Nvidia's Lite Hash Rate limiter and several circumventions developed by mining-focused software providers, investors must be cautious - there's no way to know exactly what percentage of Nvidia's gaming growth is still attributable to cryptocurrency mining.
Investors apparently weren't swayed by the company's ongoing, $15 billion share buyback program, which will run through 2023.
Nvidia shares are down an incredible 50% YoY from their ATH of $326 in November 2021, following the worldwide economic turmoil following the COVID-19 pandemic, Russia's invasion of Ukraine, and rising inflation rates across the world prompting fears of an economic recession. They're not the only company in this state - most tech stocks have taken a beating as investors look more towards operating profits rather than speculative bets on companies' future value.