Cryptocurrency Mining Is Confusing Semiconductor Makers’ GPU Trends


Wells Fargo’s David Wong and his team take a look at the graphics processor unit (GPU) business for semiconductor companies, writing that GPUs continue to see high growth, a factor that’s boosted by their use for cryptocurrency mining.

Ultimately Wong expects that the possibility that growth might moderate from the very strong year-over-year growth in the GPU market, along with uncertainty about the graphics demand for cryptocurrency, as well as competitive pressures from Advanced Micro Devices (AMD) could be a risk for Nvidia (NVDA), which he rates Underperform.

First, a little detail–while GPUs’ high growth continues, cryptocurrency confuses the results:

Nvidia’s gaming platform revenue grew 52% year/year and increased 15% sequentially to $1.186 billion in its July quarter. AMD noted that the June quarter marks its 6th consecutive quarter of double-digit year/year graphics revenue growth, with higher unit shipments and ASPs driving growth across its desktop and mobile GPU products. Mercury Research noted that PC graphics revenue was $1.44 billion in the June 2017 quarter, with the market up 35.5% sequentially and up 50.3% year over year. Mercury said that GPU suppliers are experiencing revenue expansion from non-chip portions of their business. According to Mercury, Nvidia’s unit share of the discrete GPU market in the June quarter decreased by 1.5pp sequentially to 67.0% from 68.5% in the prior quarter.

Wong has an Outperform rating on AMD and writes that its new Vega products, which came to market this month, could help it gain GPU market share in the September and December quarters. At the moment, Mercury Research estimates that Nvidia’s overall desktop discrete GPU market share, which includes GPUs for cryptocurrency, decreased by 2.7 percentage points sequentially, to 70.7% in the June 2017 quarter, and the firm estimates that Nvidia and AMD each shipped approximately a million GPU units related to cryptocurrency mining in the quarter. Wong thinks that Mercury may have overestimated AMD’s cryptocurrency-related shipments, but still using its figures, he thinks that excluding the cryptocurrency mining units, Nvidia desktop discrete GPU market share may have increased by 1.3 percentage points sequentially, to 74.7% in the June 2017 quarter.

Another question is whether Nvidia’s data center business, as many investors were disappointed with sales growing just 2% sequentially in the most recent quarter. Wong things that its its Volta V100 platform could help drive an improvement in sequential growth for Nvidia’s datacenter segment in its October quarter.

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Steve Kanaval Portfolio Manager (Digital Currency) Ault & Company teve began his career in the Trading Pits in Chicago making markets at the Chicago Mercantile Exchange (NYSE:CME) the Chicago Board of Trade and the CBOE in the early 80’s. He ran the Morgan Stanley Derivative Prop Trading for the firm specializing in Index Arbitrage. He continued his career as a Trader/Portfolio Manager for multiple Hedge Funds during the Internet Boom of the 90’s managing large portfolios. Steve is known as an expert in MicroCap Technology Stocks and the emerging Digital Currency markets as a Portfolio Manager for his Family Office. Steve has managed portfolio’s in volatile asset classes for 3 decades as a commodity trader, hedge fund manager and digital currency trader and miner. Steve is one of the few managers who publishes his views on the asset classes in a public forum and has published more than 10,000 articles simplifying these complex and volatile assets for readers. His work is published on multiple sites including Bloomberg,,, CryptoCurrencyNews as a paid contributor. Ault & Company is a private diversified holding company identifying undervalued public & private companies and disruptive technologies that executes strategies to achieve an above market rate return and liquidity for investors while measuring impact and sustainability principles of their disruptive technology and investment strategies.