author: Bart Swiatek
Nvidia's problems. Company shares cheaper by 54%
It looks like Nvidia and other big hardware manufacturers have some economical problems. Is there another hardware crisis ahead of us?
IN SHORT:
- during the last quarter NVIDIA's shares got cheaper by 54%;
- the problems started with the price collapse in mid-November and are linked to the fall in market demand and the problematic launch of the GeForce RTX series;
- the market of integrated circuits is in decline - other companies, such as AMD and Micron, are also losing value;
- the beginning of the year also does not seem to be the best for NVIDIA.
The graphics card manufacturer is unlikely to remember the fourth quarter of this year. With the last closing of the Nasdaq Composite index, the Nvidia's shares were 54% cheaper than three months ago. The problems of Nvidia began with worse-than-expected income in the third quarter - after the publication of the financial report in mid-November, stock prices collapsed (they fell by 30%).
The reasons for the current state of affairs can be traced back to several factors. First of all, the end of the e-currencies (BitCoin, Ethereum) boom resulted in a large drop in demand for graphics cards. The second reason for the poor condition of the company may be a rather cool reception of RTX 20xx series products by customers and experts, as well as the accompanying controversies (high price, breakdowns and questionable performance, especially after activating the ray tracing function). The rumors about postponing the release date of weaker cards based on the Turing architecture probably did not help either, which is said to be related to the 10xx GTXs still in stock. Finally, there are indications that Nvidia's previous stock price was artificially inflated by speculators (due to the hype for AI technology), and we are now facing a reasonable correction.
The general condition of the high-tech industry is also quite disturbing. In short, the good times are over - partly for the reasons mentioned above, and partly due to other micro and macroeconomic factors, the market has entered the so-called "downturn", i.e. a period of long-term falls in securities prices. With Nvidia, other companies such as AMD and Micron are also losing value.
Unfortunately, the beginning of the year does not seem to be the best for GeForce manufacturer. According to recent rumors, the corporation may soon lose its fourth most important investor - Japanese SoftBank plans to earn over 3 billion dollars on the sale of its shares. The final decision has not been made yet, but Nvidia's current problems are unlikely to encourage SoftBank a change of mind.