ARK Disrupt Issue 87: August 14th, 2017 https://ark-invest.com/research/ark-disrupt-issue-87

chart of NIVIDIA quarterly OEM Revenues May 2014-August 2017

This week NVIDIANVDA delivered strong second quarter results: revenue grew 56% to $2.2 billion, boosted by strong gaming and data center sales. The real surprise though was in its original equipment manufacturer (OEM) segment. For more than two years, NVIDIA’s OEM business has been in decline, following the trend of the PC industry and the unwinding of IP royalties from Intel. In the second quarter, however, OEM sales jumped 54%. According to CEO Jensen Huang, cryptomining accounted for roughly $150 million, more than all of the growth of the division, as GPUs are used to ‘mine’ cryptoassets like ether. When asked about the long term opportunity, Jensen said:

Cryptocurrency and blockchain is here to stay. The market need for it is going to grow, and over time it will become quite large. It is very clear that new currencies will come to market, and it’s very clear that the GPU is just fantastic at cryptography.

Up until this quarter, NVIDIA has been conservative when talking about the cryptomining opportunity. This change of tone and the new cryptoboards it launched in June suggest that now NVIDIA is taking this business seriously…as it should.  Cryptomining, like deep learning, is a greenfield opportunity, and the GPU’s mix of high performance, fast local memory, and programmability makes it uniquely suited to the task.

As a side, the addressable market for GPUs continues to expand, as cryptomining joins the ranks of gaming, computer aided design, scientific computing, artificial intelligence, and autonomous driving.  NVIDIA is to this age what Intel was to the computing age.

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