The company reported strong financial results overall, but its "computing and graphics" division saw sales decline three percent from the preceding quarter, driven by "lower revenue from GPU products in the blockchain market".
Additionally, a group of analysts polled by FactSet predicted that the company's revenue from gaming and servers sales would continue to grow, though crypto mining sales will likely continue to decline. Bitcoin mining has always been dominated by specialized ASIC chips, so the most popular cryptocurrency mined with GPUs is ether, the cryptocurrency of the Ethereum network.
Investors are expressing their concern at the sudden collapse of what had looked like a billion-dollar business.
Nvidia CFO Colette Kress said the decline in sales to crypto miners was not exactly a surprise for her company, although the dip was much more significant than what had been expected. Even that prediction was too high.
Rivals Intel Corp (INTC.O) and AMD have also been buoyed by the surge in demand from data centers, a rapidly expanding market powered by the explosive growth in mobile and Web apps. Nvidia CEO Jen-Hsun Huang said in March that the company needed to ramp up its production to ensure that both miners and gamers had sufficient graphics cards.
It projected third-quarter revenue of $3.25 billion, plus or minus 2 percent, falling short of analyst estimates of $3.34 billion, according to Thomson Reuters I/B/E/S. The prospect of the new design coming later this year may be causing some to hold off on purchases of its predecessor. Data-center revenue increased 83 percent to $760 million.
Nvidia had a profit of $1.1 billion, or $1.76 a share, in the fiscal second quarter, compared with $583 million, or 92 cents, in the same period a year earlier.
In terms of guidance, Nvidia expects Q3 revenue of $3.19 billion, below market estimates for $3.34 billion in revenue. Analysts estimated $3.11 billion.
Nevertheless, the GPU firm posted some other more positive earning results for the quarter.
Ahead of a conference call with analysts, shares were down 3.6 percent to $248, still quadruple their value two years ago.