Evercore: Nvidia Can 'Power Through' Bitmain Ethereum Mining Tailwinds
|NVDIA Corporation NVDA 2.13% fell about 2 percent Wednesday after Bitmain announced its highly anticipated application-specific integrated circuit (ASIC) for cryptocurrency mining. The company said the new ASIC will be available in July.
This could be bad news for Nvidia and its GPU sales, but one analyst says the Bitmain drop is a buying opportunity.
The Analyst
Evercore ISI analyst C.J. Muse has reiterated his Outperform rating and $275 price target for Nvidia.
The Thesis
According to Muse, investors who think losing cryptocurrency mining share to Bitmain will have a major impact on Nvidia are misguided.
“Our sense is that Crypto is ~5% of overall revenues and with a new Gaming GPU (called “Turing”) launch cycle ramping in 2HCY18, we believe NVDA will likely power through any tough compares from Crypto-driven tailwinds (though exact numbers are difficult to know for sure in Crypto),” Muse wrote in a note.
Muse said investors should forget about cryptocurrency and focus on Nvidia’s exposure to massive long-term growth markets, such as artificial intelligence, driverless vehicles and online gaming. Muse says the eventual transition of Ethereum mining to ASIC devices is not a new idea, and the transition is more than priced into Nvidia stock at this point.
Muse also said investors have nothing to fear from a potential flood of cryptocurrency mining GPUs hitting the secondary market. Once the new “Turing” Gaming GPU launches, he said most GPU buyers will have no use for the older model graphics cards.
Price Action
Following Wednesday’s action, Nvidia stock is now down 6.1 percent in the past month.
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