AMD says crypto boom was not part of their long-term strategy.
It has been a great year for graphics processing units as they have piggy-backed on the success of cryptocurrencies, forming an integral part of the mining effort. Companies like AMD have seen huge boosts in profits.
While GPU producers were expecting a tough year in 2017, there was a lifeline thrown to them as people snapped up their graphics processing units in a frenzy.
However, that boost has turned out to be only temporary as AMD has now said their time in the cryptocurrency sun is coming to an end. AMD predicted it from the start as they said that the crypto boom was not part of their long-term strategy.
Some leveling off
Speaking at the company’s earnings call, the CEO Lisa Su has said they are taking a more conservative view of the cryptocurrency mining operations.
“We are predicting that there will be some leveling-off of some of the cryptocurrency demand,” Su said:
“As we look at it, it continues to be a factor, but we’ve seen restocking in the channels and stuff like that. So we’re being a little bit conservative on the cryptocurrency side of the equation.”
After releasing their third-quarter earnings report, it was noted that their shares plummeted nearly 11 percent after the company said it expects its fourth-quarter sales to drop about 15 percent from the third quarter.
This is, in part, because of slowing demand for the company’s GPUs that used to speed up cryptocurrency mining operations.
AMD’s boost has been caused by demand for cryptocurrency mining, but the graphics company have said it has been hard to actually quantify. Because their cards that are being used by miners are the same as the ones for gaming, there is a difficult line to draw differentiating the customers.
Mark Lipacis, an analyst at Jefferies, said he thinks that cryptocurrency demand contributed about $75 mln to $100 mln in revenue during the third quarter. Lipacis is notably bullish on the future of cryptocurrencies for AMD. After the earnings report, Lipacis restated his “buy” rating said that as long as cryptocurrencies continue to become more valuable, AMD will see a boost in its graphics cards sales.
Rick Schafer, an analyst at Oppenheimer, is decidedly less bullish on AMD’s future. He said that cryptocurrencies were the biggest source of growth for the company and because AMD said it expects a slowdown in its crypto-related demand, the company’s medium to long-term outlook isn’t as strong as other analysts are predicting.
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Author: Darryn Pollock