After Losing Half Its Value, NVIDIA Faces Reckoning

Megalith

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NVIDIA hasn’t been doing well in the stock market lately, and while that isn’t exactly a secret, several stories have emerged this week to elaborate on how bad the numbers have become. TechCrunch pointed out a few days ago that NVIDIA’s stock has “dropped from a closing price of $289.36 on October 1 to today’s opening of $148.42, a decline of 48.8 percent,” which is pretty shocking. Management, however, believes things will rebound with the help of Turing, ray-traced gaming, rendering, and other growth opportunities.

It takes a lot for a company to lose nearly half its value in such a short period of time, but Nvidia is proving that an otherwise strong technology business can disappear in the blink of an eye. The company faces an almost perfect barrage of headwinds to its core products that is stalling its plans for long-term chip domination. First and foremost, the huge sales of its chips into the crypto space have dried up as crypto prices have crashed in recent months.
 

mt2e

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Could have Nvidia have sold all 2080 TI's for $200 that have been physically made and still lose less money then half their stock price? This just seems like such an epic fail that Jensen should immediately be booted from the company.
 

Uvaman2

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Recoking: they only have a gaming product.
Every other market of real value, big ass hungry bears are sharpening their claws.
Even worse, they seem to be not so great partners so custom silicon a la AMD seems like a stretch for them.. if they aren't the partners for the Switch 2, you will know they are terrible to work with.
 

nightanole

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In order to them to maintain $300, they would have to show 25-30% growth year over year. Every quarter they have to at least meet est street targets, and show increased guidance for next quarter. And that is min. You miss what you estimated and lower guidance next quarter, your stock halves.

Same thing is going on at AMD. You can be the worst company, under loads of debt, make pennies per share, but if you blast through numbers you say you were going to hit, and show increased guidance next quarter, your stock will triple.
 

Lakados

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This is just the reaction from the market finally coming to terms that nVidia was over valued to begin with, their projections of 25% yearly growth increases was at best a dream. Amazon is putting pressure on their cards for AI purposes, AMD has gutted their presence in the mid and low end, the smart phone and the majority of the console market have moved off their platform, Apple has dropped support for them with their latest OS update, the list goes on. Now nVidia still has money in the bank and is cash flow positive so they are not hurting per say but this has to be a big blow to their ego's which hopefully gets reflected in some of their pricing.

That being said I still need 2 or maybe 3 of the new Titans for work, and I am personally eyeballing one of the 2080TI's for a new mITX build.
 

alamox

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I hope AMD gets their shit together in the graphics arena AND Intel comes out with strong product. Lack of competition is bad for the market across the board, the lack of a chase even hurts nVidia in the long term.
AMD have been doing OK in the graphic departement, all they need is to stop doing 1 architecture for all markets, and start doing one specific to gaming, and get RID of GLOFO' process.
Nvidia have been doing great not because they are geniuses, but because they are lucky to have a competitor with no money to bring a big gaming chip to market, and abusing despicable PR tactics to trick the weak minded to buy your products isn't genius either, it's just moraly bankrupt, but nowdays who cares about anyways ethics...
 

ChadD

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That is not how it works.....
It is to a degree though. I'm not saying 200 bucks lol that is nuts. But plenty of companies push a ton of product at cost or darn close to in order to show huge revenue. Stock price is all based on how investors "feel" about a company. If a CEO can spin a story that "times are tuff but we have this here war chest from all that coin we made you last quarter and we will take the steps required to hold position... give up some profit to push revenue" Investors tend to eat that stuff up.

Nvidias fail was enjoying a few years of record profits... and not acknowledging all the competition that was going to attract. I'm not saying that they where not preparing for it at all... but they didn't prepare for it very well either. If they had they wouldn't have gotten stuck with so much stock... and they would have had an actual plan to deal with a flood of secondary product on the market, and ya being ready to sell a new generation at cost might have been a better plan then over pricing it to try and retain margin on old stock. (perhaps they should have just taken the profit hit for a quarter or two making refund payments to Board partners who made them so much extra stock... instead of protecting their margins for them releasing the next gen at +20-30%)

No doubt that they prioritized profit over revenue. That has worked for Apple over the years. It seems in this case though investors where not quite as willing to drink the cool aid. Its hard to say if investors would have been happier with lower margins a smaller revenue drop... perhaps they would have only lost 20%, or perhaps they would have still lost 50%. Its hard to predict what investors will ever do.

Its hard to see how they could have really avoided the issue completely. Nvidia could have built mining focused ASICs instead... I mean they probably could have produced some ultra low power ASIC type cards, instead of over producing consumer GPUs. Would that have been better... or worse down the road if crypto completely tanks. Who knows. Hind sight is 20/20 I guess.
 

Advil

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They still have not even released a rtx demo we can run. I'm still waiting for any Ray tracing i can see for myself with my 2080 outside minor bf5 reflections. I'm not pissed since I knew what I was buying but it's still pretty shocking there is no test content for all that silicon on our cards.
 

Iratus

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Well I’ve finally had some luck / judgement and sold at the top. One time, ever. I’m gonna revel for a second sorry (not sorry)

Bought at 20, sold down 2 years later in April 17 at 100 odd as my portfolio was very heavy with Nvidia. Kept 40% of my holdings and then completely sold at the end of September 2018 because it had gotten overweight again (mentioned it on here on Sept 24th) and tarrifs scared the crap out of me.

Sold my AMD shares that same week at 32 and change as well. 220% in 17 months on that.

Of course if I’d never sold down then the difference would have gotten me a brand new GT3 but it’s still a tenbagger in 3 years on those two and basically because I follow tech and read [H]

The posts on here had made me think and I sold pretty much everything that made physical tech products at the end of September because of the post about tariffs affecting price of graphics cards, i’d not thought it through before that.
 

Mega6

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The crypto hit was hard. The RTX hit is coming. The only way I’d own NVIDIA stocks was if u gave it to me for free.
 

joobjoob

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This is just the reaction from the market finally coming to terms that nVidia was over valued to begin with, their projections of 25% yearly growth increases was at best a dream. Amazon is putting pressure on their cards for AI purposes, AMD has gutted their presence in the mid and low end, the smart phone and the majority of the console market have moved off their platform, Apple has dropped support for them with their latest OS update, the list goes on. Now nVidia still has money in the bank and is cash flow positive so they are not hurting per say but this has to be a big blow to their ego's which hopefully gets reflected in some of their pricing.

That being said I still need 2 or maybe 3 of the new Titans for work, and I am personally eyeballing one of the 2080TI's for a new mITX build.


I suspect this is the real reason for insane 2080x prices is they are trying to prop up falling income elsewhere.
 

steakman1971

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I'm going to be in the market for a GPU to replace my 970 soon (for a new build). My budget for the GPU is going to be $300-400.
I don't care about RTX yet - right now, it's basically just a demo. It won't be mainstream until enough people have the hardware to justify development costs. Kind of reminds me of the early days of 3D - I had a small handful of 3D games that ran on my Monster 3D. I think we will need something like Direct X support before it is mainstream - we are probably not going to see anything like this until a few years from now? (Right now, AMD has nothing to compete against it - so it's the Nvidia show).
Speaking of AMD, I do hope they have a competitive offering in my price range. I don't know which card I'm going with yet, but the more choices, the better.
 

ChadD

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They still have not even released a rtx demo we can run. I'm still waiting for any Ray tracing i can see for myself with my 2080 outside minor bf5 reflections. I'm not pissed since I knew what I was buying but it's still pretty shocking there is no test content for all that silicon on our cards.
Well there is a very good reason for that. (and it doesn't mean the 2000x are any less for gaming either). They spun a marketing story for the 2000s. Turing was never designed primarily for gaming. It never was. The "RTX" ray tracing cores... are in fact tensor cores. The tensor cores in the volta cards stuck very closely to the Google Tensorflow API as it was laid out. Turing extends tensor... allowing for the tensor units to operate at lower precision (int8 and even int4). NVs gaming software engineers and marketing folks where clearly tasked with finding consumer facing uses for tensor flow hardware. (as every GPU going forward from NV is going to feature tesnor cores for their non gaming customers)

They came up with powering partial ray tracing with tensors... which is actually a great use. Rays don't require INT16 precision... they can calculate more rays at int8 or int4, it won't be as acurate but that isn't required for a video game. They came up with DLSS. Both are interesting and great consumer uses for tensor hardware. Still I wish Nvidia had just been upfront... and simply said we have improved our Tensor hardware we included on volta. By improving it for our AI customers we have realized there is all this awsome cool potential stuff we can use it for for gamers. I would have rather heard the truth.... "we designed all this cool stuff for our AI ambition and guess what all that seemingly non game related R&D is going to pay off cause we can use it for this this and this." Instead we got a bit of a lie that they had designed ray tracing cores. lol
 
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ChadD

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No, it is not. You need to read what was quoted again. NVIDIA did not lose any money.
Fair point. Their market value seems to be based on a lot of speculation. I guess I did make it sound like they where 1990s Apple making overpriced imacs. :) lol
 

sfsuphysics

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Crypto gpu mining dead and the 2K series isn't worth it. Going to take a year or more to recover. In the mean time Intel and AMD making moves.
It would be interesting to know what the stock price was before the mad rush on graphics cards for crypto mining.
 

bugleyman

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Could have Nvidia have sold all 2080 TI's for $200 that have been physically made and still lose less money then half their stock price? This just seems like such an epic fail that Jensen should immediately be booted from the company.
You're confusing market capitalization and profit. Nvidia doesn't lose money when the stock price goes down.

Also, they can't make 2080TIs for $200...why would they ever want to sell them for that?
 

Iratus

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The share price was based more on machine learning and ai than crypto. You don’t get a bump like that off a few good quarters, it’s off the fact you have a chance to be in millions of servers a year. Now amazon is indicating they might go native and google already did it (though nvidia is an option) it takes the wind out their sails (and sales)

Crypto helped no doubt but it was never really seen as a long term trend for gpu manufacturers because it had limited long term prospects because of ASICS and general sustainability of the model and then of course general financial sector malaise about cryptocurrency. You don’t get a p/e like that off of short term things. You get them from people betting you are going to dominate a new and valuable market.

Plus there’s a few other market headwinds that have affected a lot of stock.
 

Joust

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Lots of, "But the gamers...!" Sentiment here. I'd be more interested to see what's up with the enterprise sector's appetite recently.
 
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