Stock of the Week: NVIDIA

Can ‘supercomputers on wheels’ save sales in a crypto downturn?

Andrew Willis 15 March, 2021 | 4:28AM
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Over the past few years, the market has come to accept that NVIDIA is at the top of the GPU game. But how much the graphical processing unit business is long-term high growth stories like driverless cars – and how much of it is…crypto?

When it comes to NVIDIA’s valuation, the ‘crypto’ segment is where things get a but murky – and risks of a sales segment collapse become a reality. We’re concerned with the surge of demand related to cryptocurrency mining – specifically Etherium.

Back in the days when it was all about bitcoin – circa 2018 –  the crypto downturn wiped out 12% of sales for the company’s gaming GPUs. Sector Strategist Abhinav Davuluri notes that management estimated crypto losses in the $100-$300 million U.S. dollar range, but he believes the true impact is higher – and he’s thinks the segment will slow in the second half of this year.

But the company is more than Crypto. Its GPUs are at the core of an explosive artificial intelligence sector that’s delivering the value of human-like processing power to an array of established industries. NVIDIA’s Drive PX platform, for example, is a deep learning platform that runs machine learning for self-driving cars. It has more than 370 partners on board already.

From data storage to medical diagnostics to digital assistants, it’s hard to put a book value on AI today. But two things are certain: these opportunities go well beyond a potential crypto correction this fall, and long term investors will be the ones benefitting the most from opportunities.

For Morningstar, I’m Andrew Willis.


Editor's Note: All images are courtesy of and AP Images. 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
NVIDIA Corp846.71 USD0.76Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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