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Nvidia is hit by another ‘crypto hangover,’ and that isn’t the only problem

While in high demand and short supply for the first two years of the pandemic, Nvidia Corp.’s gaming cards have been hit by declines in three separate pandemic booms in 2022: Personal-computer sales, videogames and cryptocurrency.

Nvidia
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-6.30%
warned Monday morning that it expects $1.4 billion less in revenue that it had previously forecast, mostly because of weak sales for its signature gaming equipment, and took a charge for overstuffed inventory channels. In response, Nvidia shares fell 6.3% Monday, continuing a decline that was sparked by concerns about a multitude of storms hitting its core business this year.

PC sales have pulled back considerably after a two-year surge, and spending on videogames and gear for them has also come back to earth. At the same time, drops in cryptocurrency prices have made mining less profitable, and Nvidia cards have been used extensively to mine for Ethereum
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and other crypto.

For more: Why semiconductor stocks are ‘almost uninvestable’ despite record earnings amid a global shortage

The result is that demand for gaming cards has dropped, just as waves of secondhand gaming cards have flooded the market from crypto miners looking to recoup some of their costs. While Nvidia cards can now finally be had for close to their manufacturer’s suggested retail price after years of higher prices, merchants are still struggling to sell them as cheaper, used cards become available, leading to overstocked inventory.

“While the cut is sizable, we doubt it actually comes as an enormous surprise given gaming GPU datapoints have been getting increasingly negative for some time now, as severe shortages quickly turned into gluts and crypto imploded,” Bernstein analyst Stacy Rasgon, who has an outperform rating and a $210 price target, wrote in a note Monday.

If all of this sounds familiar, it is because something similar happened in 2018, when Nvidia suffered from what Chief Executive Jensen Huang described as a “crypto…

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