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AMD CEO Sees 'Leveling Off' in Cryptocurrency Mining Demand

Graphics card maker AMD reported a major sales jump in the third quarter of 2017 amid significant demand from the world’s cryptocurrency miners.

On its Tuesday afternoon earnings call, the company reported $819 million in revenues from its computing and graphics division for the third quarter of 2017, a whopping 74 percent increase over the prior year’s quarter.

While the company’s graphics processing units (GPUs) have been traditionally used by video gamers, cryptocurrency enthusiasts are quickly snatching up the tools for mining ethereum and other coins. In a possible nod to that circumstance, AMD said the revenue was “primarily driven” by strong sales of its Radeon GPUs and Ryzen desktop processors – both of which are employed for crypto-mining.

In particular, AMD noted that sales of the Vega 56 and Vega 64 GPUs ramped up significantly during the quarter. These are among the most highly sought-after devices in the cryptocurrency market because of their significant processing power compared to other products.

With stagnant growth in its other core business segments, the surging GPU sales fueled a 26 percent year-over-year increase to a total revenue of $1.64 billion, making it the company’s highest-grossing quarter since 2011.

But while the numbers are eye-popping, the company’s shareholders weren’t impressed with the Q3 results.

AMD shares ultimately dropped 12 percent, from $14.25 at closing on Tuesday to as low as $12.43 in after hours trading. This coincides with the investment communities highly cautionary stance towards AMD’s exposure to the volatile and potentially fleeting cryptocurrency market.

Plus, AMD forecasted a decrease in cryptocurrency-related revenues for the fourth quarter, expecting its fourth quarter revenues to decrease by 15 percent from the third quarter, give or take three percent.

As CEO Lisa Su said on the earning call:

“In terms of the headwinds … we’re also predicting that there will be some leveling-off of some of the cryptocurrency demand.”

Overall the message was mixed. While she issued bearish statements about the future of cryptocurrency mining as it relates to AMD’s earnings, she also seemingly left the door open for other opportunities, although those seemed less clear.

“There’s also [a] commercial blockchain component that we believe is interesting and likely to continue into the medium term,” she said.

Image Credit: Gene Wang/Flickr

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Report: Cryptocurrency Mining Will Boost AMD and Nvidia Stock Prices

At least one major Wall Street firm expects that the stock prices for Nvidia and Advanced Micro Devices Inc. (AMD) will continue climbing as both companies continue to pursue opportunities in the cryptocurrency mining market.

Nvidia has seen its stock jump almost 180 percent over the last year, while AMD has jumped 112 percent as well, thanks to cryptocurrency miners’ extensive need for powerful graphics processing units (GPUs). Global investment banking firm Jefferies believes the market for GPUs will remain strong over the next several months, according to a new report.

According to a client note written by Jefferies analyst Mark Lipacis, the stocks are the market’s top performers for the past year – a state of affairs that is expected to continue looking ahead.

In the letter (quoted by CNBC), Lipacis said:

“We think that the risk of a ‘crypto-driven’ inventory correction driving material downside is low in the near term … Both AMD and NVDA have introduced ‘cryptospecific GPU [stock-keeping unit]’ that have a low risk of competing with core gaming GPUs in secondary markets.”

Both companies have taken advantage of cryptocurrency mining by developing and selling GPU models specific to that market. Cryptocurrency mining is an energy intensive process by which new transactions are added to a blockchain, creating new coins in the process as a reward.

Looking ahead

In the long-term, Lipacis does not expect either company to have to compete with second-hand equipment being sold by miners after they are through with the machines.

At the same time, Lipacis suggested that GPU prices could dip, an eventuality that may have an impact on the stock prices.

Even if the market for mining GPUs collapses, Lipacis does not believe it will have a major impact on either company’s bottom line. He expects AMD to undergo a 3% drop and Nvidia to undergo a 10% decrease in the event of a major catastrophe.

As previously reported, both companies have moved to capitalize on the interest in GPUs among the world’s miners. Nvidia’s CEO, Jen-Hsun Huang, recently declared that “cryptocurrencies and blockchain are here to stay”, signaling his firm’s long-term plans for the market.

While AMD hasn’t been as outwardly bullish in its own public statements, the company has seen significant interest in its products from miners as well.

Image Credit: MAX SAYPLAY / Shutterstock.com

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [email protected].

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.