That’s according to Morgan Stanley, which said in a research report this week that college students in dorm rooms and teenagers at home are boosting demand for graphics processing units (GPUs) from NVIDIA and AMD as the price of ether surges in value. (See also: Why NVIDIA, AMD Aren't Including Bitcoin In Forecasts.)
Morgan Stanley analyst Joseph Moore said the frenzy around ether is giving the chipmakers more windfalls that could result in earnings beat for the December quarter and the current one. In the research report, which was covered by Barron’s, Moore wrote that ether’s value skyrocketed in the fourth quarter, boosting demand for the GPUs sold by both companies and likely pushing sales of the chips up by 50% when compared to the third quarter. The analyst noted it doesn’t hurt that a lot of the ether mining is taking place in college dorm rooms where students don't have to worry about paying high electric bills. What’s more, he said he has received multiple requests to help people show their teenage children how to get into crypto mining.
Who Benefits Most?
Among NVIDIA and AMD, the latter appears to be the bigger beneficiary in this newfound interest in ether. While that will serve as a short-term boost for the two companies, it's not without risks. “Sequential growth in Ethereum, combined with improvement in pricing across the board, would certainly drive substantial upside to the quarter, even higher than whispers,” wrote Moore. “However, we see this masking some weakness in the uptake of desktop and notebook processors, and certainly shortage in AMD graphics cards is limiting traction in the longer lived gaming business.” Moore noted that while AMD has been leading in the ether-fueled demand the shortage of supply has been more “intense” driving business NVIDIA’s way. (See also: NVIDIA Wants Retailers to Favor Gamers Over Miners.)
In the near-term, the analyst expects AMD to weigh in with revenue of $1.55 billion for the December quarter and $1.43 billion in the current quarter, which is higher than the analyst consensus which stands at revenue of $1.4 billion and $1.24 billion respectively. EPS could come in at $0.09 and $0.08 cents in the last quarter of 2017 and the first quarter of 2018, also higher than the $0.05 and $0.02 EPS analysts are looking for. NVIDIA can also beat as a result, with the Morgan Stanley analyst predicting revenue and EPS in the December quarter will be $2.81 billion and $1.25, higher than the $2.65 billion in revenue and $1.15 EPS expected. As for the current quarter, Moore expects sales of $2.55 billion and EPS of $1.01, higher than the $2.46 billion and $0.98 EPS Wall Street is looking for.