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Nvidia stock plummets after 'crypto hangover'

CNN logo CNN 11/16/2018 By Daniel Shane, CNN Business
Computer chipmaker Nvidia is feeling the pinch from a cryptocurrency slump.© SAUL LOEB/AFP/Getty Images Computer chipmaker Nvidia is feeling the pinch from a cryptocurrency slump.

Bitcoin's slump is causing a big headache for one of Silicon Valley's top tech firms.

Computer chipmaker Nvidia's stock plunged nearly 17% in after hours trading on the Nasdaq on Thursday, after the company's third quarter financial results came in significantly lower than expected.

Nvidia (NVDA) specializes in making hardware for video game consoles and digital currency mining, the process by which computers are used to create bitcoinand other cryptocurrencies by solving complex math problems.

But bitcoin prices have more than halved this year after a spectacular rally in 2017. That has hit demand for Nvidia's technology, the company revealed Thursday, causing unsolved inventory of its products to pile up.

"The crypto hangover lasted longer than we expected," Nvidia CEO Jensen Huang said on a conference call with investors Thursday.

Things could get worse before they get better, with the price of bitcoin recently falling to its lowest level in a year. Nvidia said for the current holiday season quarter it now only expects to record revenues of $2.7 billion, compared to analyst forecasts of about $3.4 billion.

Nvidia isn't the only big US tech firm to suffer as a result of the crypto rout. Rival chipmaker AMD (AMD) reported lower than expected earnings last quarter, blaming the cryptocurrency slump for a slowdown in sales. The company said it expects revenue to fall below analyst expectations in the current quarter as well.

Bitcoin's price dropped to its lowest value in over a year. At the end of 2017, it was valued at roughly $20,000.© Dan Kitwood/Getty Images Bitcoin's price dropped to its lowest value in over a year. At the end of 2017, it was valued at roughly $20,000.

AMD's stock was down about 5% in after hours trading on Thursday.

Founded in 1993, Nvidia started off selling computer cards that improved the performance of video games. But it's since expanded into bigger and pricier areas. Today, one Nvidia product, the DGX, can cost as much as $149,000.

Among Nvidia's key backers are Japanese tech giant SoftBank, whose $93 billion Vision Fund holds a sizable stake in the firm. SoftBank's stock fell more than 3% in Tokyo on Friday.

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