A few thoughts on $NVDA. Yesterday, the company announced preliminary Q2 results that were quite bad. The gaming segment is down -44% QoQ and -33% YoY, an unexpected decline falling short of management’s original guidance.

This slowdown has been somewhat expected since gaming demand is lower than during the pandemic and especially because of the cryptocurrency crash.

I have posted about falling GPU prices a few times already. IMO, Nvidia is understating the importance of crypto mining to their GPU sales, or they just don’t know the exact number.

As I see it, the crypto crash is forcing some crypto miners to unwind their operations and sell their equipment. Used GPUs are totally fine for most gamers, so if they are available on the market, they will buy used ones before buying brand-new cards. This leads to inventory build-up at Nvidia combined with the slowing gaming demand.

Another factor is the upcoming Ethereum update. While we don’t know when it will come, once it’s done, miners will not use Nvidia GPUs anymore. Some anecdotal evidence, if you look at crypto miners on TikTok showing off their setups, it's almost always big racks of RTX 3070 GPUs running in the background with a weirdo explaining how to get rich from crypto mining. This is going away to some extent, especially if the crypto downturn continues for an extended period of time.

IMO, Nvidia might be up for a few rough quarters because of the gaming segment. The same thing happened in the last crypto crash in 2018. Long-term, this wide-moat company will be fine, especially because of the fantastic data center segment which is growing +61% YoY.

As of today, I have not bought Nvidia, but shares are beginning to look attractive. Historically, this has been an excellent stock to buy when the company had temporary issues. Therefore, I’m patiently waiting for the share price to come down to at least $140 to start building a first position.

What do you think about Nvidia?