Nvidia stock is falling.
Even with the abysmal stock performance seen in Q4 of 2018, that isn’t enough to sink a behemoth of Nvidia’s size. However, it serves as a jarring wake-up call, because Nvidia stock has plummeted to just about half of its peak value earlier in this year, and is well below its average before then.
Nvidia is easily the dominant GPU vendor in the PC market right now, so how did they get here? There are likely a few reasons, but we reckon the bulk of it boils down to just three letters:
Nvidia RTX, or how NOT to launch new GPUs
Nvidia RTX isn’t a good purchase.
Among the vast community of PC gamers that should have been ecstatic at a new line of GPUs from Nvidia, this was the consensus.
Prominent tech YouTuber LinusTechTips was among the most vocally critical of the RTX line from Nvidia.
Nvidia RTX launched to critical reviews and little-to-no-support for the new technologies. As fascinating as real-time ray tracing is, it simply was not ready for the mainstream when it premiered in September of 2018.
While a few synthetic benchmarks were available, no games existed that could utilize the new technology. Additionally, cards like the RTX 2080 and 2070 are competing with the last-gen 1080 Ti and 1080, respectively, which offered near-identical performance at a much lower price…at the time.
The 2080 Ti serves as the flagship of Nvidia’s new GPU line, but it, too, is plagued with issues. Consumers pre-purchased the new card in droves, only to find their shipments delayed by multiple weeks. Once those customers acquired their new hardware, an alarmingly high number of early adopters reported dead or dying cards.
Nvidia waited over a month before admitting there was a problem.
How RTX Fallout Hurt Nvidia
Developing new technology costs money, and RTX’s poor pricing against its predecessors demonstrates that point. Nvidia was eager to show off this new tech to investors and the community, but they simply fired too soon.
Savvy customers stuck to the diminishing stock of the 1080 and 1080 Ti instead of purchasing the 2070 or 2080. Even the 2080 Ti’s sales were abysmal after launch, thanks to the aforementioned issues. While the 2070 and 2080 are likely to pick up moving into 2019 (since they’re the only options left right now), launches from AMD and Intel are sure to provide new competition in that price range.
All that being said…it wouldn’t be fair to blame RTX for all of Nvidia’s diminished stock performance. The rest of the blame lies with cryptocurrency.
How The Crypto Crash Hurt Nvidia Stock
Make no mistake: cryptocurrency like Bitcoin and Ethereum are fascinating, innovative technologies. We aren’t here to argue against that.
The writing is on the wall, though: these cryptocurrencies plummeted, hard, in late 2018. This didn’t just hurt crypto miners and investors, however- companies like AMD and Nvidia took big hits in stock alongside this crash.
Thanks to the rising popularity of cryptocurrency in early 2018 and late 2017, cryptocurrency mining became popular. Insanely popular. It just so turned out that modern GPUs from AMD and Nvidia at the time were perfectly-equipped to mine this cryptocurrency, essentially generating money.
The demand for GPUs, which were previously for the PC gaming niche, became so overwhelming that it caused a GPU shortage. This greatly hurt the PC gaming market, but it delighted the likes of AMD, Nvidia, and their shareholders. Their manufacturing efforts couldn’t keep up with the demand.
While this sounds like the best problem for a business to have, the truth is that kind of growth is simply unsustainable. Once the bubble popped, so too did AMD and Nvidia stock…but Nvidia took it even worse because their flubbed RTX launch happened at right around the same time.
In truth, falling Nvidia stock can’t be blamed on a single factor. It wasn’t one thing going wrong, it was many things going wrong at once that put Nvidia into this position.
As dramatic as things may seem on the stock market, consumers don’t need to worry just yet. Nvidia and their investors have learned a very important lesson moving into 2019, and the launch of even more new GPUs is sure to bring lower prices and higher performance to the market in the coming year.
What matters is that Nvidia learns from the mistakes they’ve made with RTX thus far, and course correct moving into 2018. If some of the wilder rumors about AMD Navi are true, and if Intel is finally stepping in, Nvidia’s throne is soon to be hotly contested.
We can’t tell you how it’ll pan out yet, but we’ll keep you updated here on Tech News Today.