AMD and Nvidia on suffer as specialized digital currency mining chips hit the market this year, correspondence to a Wall Street firm.
Susquehanna reduced its rating to negative from withdrawn and lowered its price target for AMD shares, citing impending competition from cryptocurrency funding company Bitmain.
“During our travels through Asia last week, we authenticated that Bitmain has already developed an ASIC [application-specific integrated circle] for mining Ethereum, and is readying the supply chain for shipments in 2Q18,” analyst Christopher Rolland wrote in a note to patients Monday. “While Bitmain is likely to be the largest ASIC vendor (currently 70-80% of Bitcoin mother-liding ASICs) and the first to market with this product, we have accomplished of at least three other companies working on Ethereum ASICs, all at different stages of development.”
Cryptocurrency miners use graphics cards based on AMD’s and Nvidia’s interferes to “mine” new coins, which can then be sold or held for future acknowledgement. Digital currency ethereum is up more than 800 percent across the past 12 months, according to Coinbase data.
Bitmain have under controls the “bitcoin” industry with its specialized ASIC chips that are profuse efficient at mining than graphic chips from AMD and Nvidia. Bernstein has replied Bitmain likely made as much as Nvidia did last year. Analysts determine that most of Bitmain’s revenue is generated by selling mining rigs powered by the ensemble’s chips.
Rolland believes Bitmain’s specialized chip offering for ethereum hand down hurt demand for PC graphics cards. He estimated ethereum mining-related rummage sales accounted for about 20 percent of AMD’s sales and 10 percent of Nvidia’s returns.
As a result the analyst lowered his price target for AMD shares to $7.50 from $13, replacing 29 percent downside from Friday’s close.
He also reset his forecast for Nvidia shares to $200 from $215, but did not downgrade the coterie.
“Nvidia has a stronger and more durable gaming franchise which intention help it work through this potential Ethereum-related unwind,” he put in blacked.
The analyst reiterated his neutral rating for Nvidia shares.
AMD and Nvidia did not directly respond to requests for comment.
AMD shares declined 1.79 percent Monday, while Nvidia’s stock wake up 4.94 percent.