Demand for cryptocurrency mining has been a pleasant surprise for shareholders of Advanced Micro Devices, Inc. AMD 0.82% and NVIDIA Corporation NVDA 0.97%.
There’s no question the surge in crytocurrency prices has driven demand for cryptocurrency mining GPUs. However, recent reports of China shutting down bitcoin exchanges have sent the volatile currency’s value plummeting $100 since Friday.
If the cryptocurrency boom starts to hit more snags, should AMD and Nvidia investors be worried?
According to Jefferies analyst Mark Lipacis, the answer is no. In a new report, Lipacis took a deep dive into the impact cryptocurrency mining has had on AMD and Nvidia and the risk investors face from a crytocurrency slow-down.
Breaking It Down
For starters, NVDA has more than three times as much exposure to the cryptocurrency market as AMD, Jefferies estimates. The firm says mining accounts for roughly 10 percent of Nvidia’s total revenue, but only about 3 percent of AMD’s revenue.
In addition, Lipacis believes AMD and Nvdia are more insulated from a potential downturn in cryptocurrency prices than they were during the 2014 bitcoin decline due to the nature of their current product cycles.
“Both AMD and NVDA have introduced ‘cryptospecific GPU SKU’ that have a low risk of competing with core gaming GPUs in secondary markets,” Lipacis wrote.
The recent dramatic appreciation in cryptocurrency prices should protect both stocks from any near-term crypto-related volatility as well.
Just A Fad?
Finally, Lipacis acknowledged that cryptocurrencies may end up being just a fad, but Jefferies is convinced otherwise.
“We actually believe…
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