Nvidia Corp predicted better-than-expected first-quarter revenue on Wednesday, and its flagship gaming chip is expected to remain in short supply in the coming months.
As people wait for COVID-19 vaccine rollouts around the world, stay-at-home orders have kept demand high for chips that speed up video games. But the Santa Clara, California-based company’s gaming chips have also regained popularity for mining cryptocurrency, a trend Nvidia is trying to counter by offering special mining chips in order to free up graphics chip supplies for gamers during a global chip shortage.
While Nvidia was long known for its gaming graphic chips, its aggressive push into artificial intelligence chips that handle tasks such as speech and image recognition in data centers has helped it become the most valuable semiconductor maker by market capitalization.
It has surpassed competitors Intel Corporation and Advanced Micro Devices Corporation.
After the results were announced, Nvidia’s stock rose 3% in extended trading to $597.50.
In a conference call with investors, Chief Financial Officer Colette Kress said that the global chip crunch made it difficult for the company’s flagship gaming chip launched last fall to maintain inventory, and that the chip was in the first fiscal quarter. May still be in short supply.
Kress said analysts have estimated that cryptocurrency mining contributed between $100 million and $300 million to Nvidia’s sales in the fiscal fourth quarter. The company expects the new mining chips to generate about $50 million revenue in its fiscal first quarter, Kress added.
To discourage miners from using gaming chips, Nvidia will start shipping software with its gaming chips that slows down their ability to mine some currencies and then separately release a mining-specific chip. Nvidia Chief Executive Officer Jensen Huang told Reuters that the mining chips do not need gaming features such as display outputs, which means that chips that might not be suitable for gaming can be used for mining instead.
“The way the use the chips, they don’t need a whole bunch of functionality,” Huang said of miners.
The company expects first-quarter revenue of $5.30 billion, plus or minus 2%, above analysts’ average estimate of $4.51 billion.
Revenue for the quarter ended January 31 increased to $5 billion from $3.11 billion in the same period last year. According to Refinitiv’s IBES data, analysts’ average expectation is $4.82 billion.
According to data from FactSet, the company’s gaming division’s revenue was $2.5 billion, higher than analysts’ estimate of $2.36 billion. Data center revenue was US$1.9 billion, which was higher than FactSet’s forecast of US$1.84 billion.