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Monday, June 11, 2018

AMD NVIDIA Still Good With Soft Crypto

If you remember AMD and NVIDIA were trounced ahead of their last earnings reports.  Investors were concerned that weak crypto mining would hurt sales. They were of course wrong.

We were bullish on both companies anyway but when we saw TSMC come out bullish on crypto twice ahead of earnings it gave us even more conviction.

TSMC Out Again On Crypto

TSMC just came out sounding a little more bearish this time on crypto in their recent monthly revenue update.

Last time TSMC said "strength in crypto mining."

This time they said, "growing uncertainty facing the cryptocurrency mining market."

That's a little less bullish coming out of TSMC which was a great heads up before AMD and NVIDIA earnings.

Both stocks catapulted since earnings.

What About AMD and NVIDIA This Time

I think TSMC's comments, while not great, are fine for AMD and NVIDIA anyway. Both AMD and NVIDIA slashed estimates going forward for mining related revenues.

Two quarters ago NVIDIA expected crypto-related revenues to be "flat" sequentially. They ended up seeing strong sales. But last quarter they slashed crypto related estimates to be down by "one-third of its Q1 level."

So if mining related revenues are in fact weak it sounds like NVIDIA's guidance reflects that.

As for AMD they said 10% of their revenues last quarter were "blockchain" related. They guided that they expect the year to be "mid to high-single digit percent of revenue for 2018." So AMD also expects sales to fall off from crypto.

So any crypto-related weakness as pointed out by TSMC is factored into both AMD and NVIDIA's guidance.

BTCUSD
Source: Bitcoin Price
Bitcoin Price Dropping Adds To This

Bitcoin down adds weight to TSMC's comments. But again, AMD and NVIDIA having lower expectations for crypto gives us comfort that their growth estimates are not dependent on crypto strength.

Conclusion

I think we're ok.






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We are long AMD for a customer.

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