Last week's 18% stock drop wasn't just a blip for Nvidia, with Team Green's share value tumbling even further during the start of this week, down an additional 12%.
Nvidia's share value currently sits at $144.70, down from $289.36 on October 1st. Basically, over half of Nvidia's entire market cap has been wiped off in just seven weeks. This has undone around 15 months of steadily increasing value.
This is a massive setback for Nvidia, which could ultimately come down to the bubble bursting on the cryptocurrency market, resulting in a surplus of inventory for previous-gen graphics cards.
We're also hearing murmurs that demand for GeForce RTX 20 Series GPUs is slower than anticipated due to the inflated pricing. The GeForce RTX 2070 is the cheapest model in the GeForce RTX family and would typically set you back around $600. Hardly an impulse purchase then, and it seems plenty of folks are content to wait this generation out for now.
The silver lining is that Nvidia is still an absolute giant and worth considerably more than it was in 2016. Its market cap of $87.98 billion compared to AMD's $19.10 billion showcases its current dominance over the graphics card market despite its rocky patch.
Original Story: 18-Nov-2018 - Nvidia Shares Plummet 18% in a Single Day Due to GPU Oversupply and Lack of Crypto Demand
Nvidia’s share value has plummeted over the past few days, dropping 18% in value since Team Green shared its latest financial results.
The overall results for Nvidia were actually impressive despite the precipitous share value drop. Record revenue was attributed to Nvidia’s automotive, data centre and workstation visualisation sales; enough for Nvidia to tell shareholders dividend payouts would actually be 7% higher than previously anticipated.
"AI is advancing at an incredible pace across the world, driving record revenues for our datacenter platforms," said Nvidia CEO Jensen Huang. "Our introduction of Turing GPUs is a giant leap for computer graphics and AI, bringing the magic of real-time ray tracing to games and the biggest generational performance improvements we have ever delivered."
So why the big drop? Well, despite the strong showings in various divisions, Huang said this is the result of a correction taking place after the cryptocurrency boom. The crypto mining fad has slowed considerably and Nvidia is now sat on a lot of excess stock of graphics hardware. Nvidia increased its holding inventory five times during this quarter.
Our near-term results reflect excess channel inventory post the crypto-currency boom, which will be corrected,” said Huang.
There’s a kind of two-fold damage coming Nvidia’s way here. Firstly, old stock is still filling up retailers and storage and needs to be moved on. Compounding this is expected lower sales for the upcoming quarter. Retailers aren’t needing to order more stock as they’ve already got plenty backed up after over-ordering to meet crypto demand.
While conjecture, for now, it also wouldn’t be too surprising if demand for the GeForce RTX 20 Series wasn’t as high as for previous-gen launches. The new graphics cards are prohibitively expensive, while there are also reports of faulty RTX 2080 Ti’s and widespread disappointment over the RTX ray tracing capabilities of the GPUs, even at 1080p.
The end result is an Nvidia that looks in worse shape than it has for a while. It’s certainly nothing approaching disastrous but share values declined 18.76% on Friday, dropping from $202 down to $163. Nvidia’s share value is now almost half what it was during its peak of $289 in late September, right before the RTX 20 Series graphics card launches.