Nvidia's share price pushed higher on the back of a mixed second-quarter update last night.

Earnings per share came in at $1.24, above the consensus estimate of $1.15. Revenue fell by 17% compared with the same period a year ago, to $2.58bn, but it still managed to exceed the $2.54 forecast.       

The gaming division, which is the largest division of the business, reported a revenue fall of 27% on an annualised basis, to $1.31bn, narrowly topping the $1.30bn forecast. Graphics cards for desktop PCs and system-on chip components for gaming systems saw declines in demand.

Mixed outlook for Nvidia share price

Last year, the company experienced record sales, but on this occasion, due to the slowdown in China and major drop-off in demand for cryptocurrency mining chips, the group is coming off the boil. The numbers posted last night are now the "normalisation" for the business.

Nvidia's outlook is mixed however, but that hasn't appeared to faze traders. The group predicts that third-quarter revenue will be in the region of $2.84bn to $2.95bn, below the consensus estimate of $2.97bn. Gross margin for the next quarter is tipped to come in between 62% and 63%, comfortably beating forecasts at 60.2%.

US-China trade dispute effect diluted

The portracted US-China trade spat has a technological component to it, as national security and intellectual property rights are major concerns for the US. Chinese technology giant Huawei has been at the centre of the dispute, and recently President Trump said that he "won't do business" with the company. This stance has proved to be problematic for the likes of Intel, Broadcom, and Qualcomm, as suppliers of the Chinese tech giant. Nvida has also suffered as result of the clampdown, and the group's advancements in artificial intelligence should ensure that is diversified from any further fallout.

Nvidia primed to benefit from crypto boom

Bitcoin and other cryptocurrencies, like ethereum, enjoyed a rally into June, and it put digital currencies back on the radar for many investors. Facebook revealed plans to launch its own digital currency, Libra, and that has fuelled the recent rally across the board. Mr Trump called for tighter regulation on Libra, which has taken the wind out of the sails of the crypto rally.

Nvida benefited from the crypto mining boom in 2017, and should we see a similar craze, the group should stand to benefit.  

 

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