Nvidia CEO Jensen Huang sat down with CNBC on March 29th to address mounting skepticism about the company's growth trajectory. Nvidia's stock had surged 560 percent over two years, a run fueled in par
Nvidia CEO Jensen Huang sat down with CNBC on March 29th to address mounting skepticism about the company's growth trajectory. Nvidia's stock had surged 560 percent over two years, a run fueled in part by demand from cryptocurrency miners hungry for the company's graphics processing units. Critics questioned whether the boom could sustain itself.
Huang disputed the concern. "Cryptocurrency will be here. The ability for the world to have a very low-friction, low-cost way of exchanging value is going to be here for a long time. Blockchain's going to be here for a long time and it's going to be a fundamental new form of computing," he said. "I expect blockchain, I expect cryptocurrency to be an important driver for GPUs."
The volatility in cryptocurrency markets had already unnerved Nvidia. In November 2017, the company said it would stay flexible in its approach to mining demand after mining-related revenue fell by $80 million between the second and third quarters that year. By the end of 2017, mining revenue had bounced back.
Huang framed mining as peripheral to the core business. Gaming, data centers, professional graphics, and autonomous vehicles would drive Nvidia's expansion, he said. Mining supplied an "extra bit of juice."
Nvidia had spent years building graphics processing units for work beyond traditional graphics. The company invested in GPU technology to handle non-graphical functions and began developing supercomputers that Huang described as perfect for artificial intelligence researchers. The parallel processing power of Nvidia's GPUs had attracted both cryptocurrency miners and blockchain operators.
Demand had grown so acute that Nvidia ran short on inventory. Two days before the CNBC interview, Huang told TechCrunch about the supply shortages. "We're sold out of many of our high-end SKUs, and so it's a real challenge keeping [graphic cards] in the marketplace for games," he said.
Gamers bore the brunt. Miners snapped up Nvidia's top cards, leaving fewer options for game developers and players. Huang traced the issue to cryptocurrency's fundamental architecture. "At the highest level the way to think about that is because of the philosophy of cryptocurrency — which is really about taking advantage of distributed high-performance computing — there are supercomputers in the hands of almost everybody in the world so that no singular force or entity that can control the currency."
Huang considered the shortage an enviable problem. Nvidia was ramping production to narrow the gap between available supply and customer demand.
