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We won't know exactly how much NVIDIA's gaming business has been boosted by cryptocurrency until the bottom falls out.īeyond the gaming business, NVIDIA's dominance in the AI accelerator market will be threatened by specialized chips designed specifically for the task. Wong believes it could start to impact NVIDIA in its quarter ending in July 2018. This slump in demand, coupled with a potential flood of used graphics cards from miners no longer able to turn a profit, will hurt NVIDIA's results.

At some point, it won't make any sense for someone to invest in gear to mine cryptocurrencies, and this excess demand will vanish. The entire cryptocurrency market has plunged this year, with Ethereum losing around two-thirds of its value since peaking. This demand will only persist if it's profitable to mine cryptocurrencies. Demand from miners has created a shortage of graphics cards, pushing prices well above MSRP.

Those mining cryptocurrencies like Ethereum use powerful GPUs to perform the computationally intensive calculations. The crux of Wong's argument is that cryptocurrency-related demand is artificially propping up NVIDIA's sales and profits. But there are also plenty of ways the company could be derailed, sending the stock in the direction of Wong's pessimistic price target. Selling GPU-powered platforms to auto companies could become a big business for NVIDIA once self-driving cars start to take off. The automotive business is still small and not growing very fast, but that's because self-driving cars are still only being tested.

Strong demand for NVIDIA's gaming GPUs and the proliferation of GPUs for accelerating artificial intelligence and other data center workloads have been the drivers behind NVIDIA's impressive growth and margins. CNBC's Michael Bloom contributed to this story.NVDA operating margin (TTM). Nvidia's AI software called CUDA has more than 1 million developers using it, according to Muse. He predicts the company can increase its earnings per share by 30 percent to 35 percent annually through 2020. Muse estimates that Nvidia will have a future addressable market of more than $50 billion in the data center and $60 billion in autonomous driving due to its artificial intelligence capabilities. Its stock has risen 38 percent this year through Thursday versus the S&P 500's 9 percent gain. Nvidia shares closed up 5.1 percent Friday. "Very importantly, we view Nvidia as being on the cusp of a tipping point in the company becoming the AI standard platform."

"NVDA continues to make a compelling case for long-term sustainable growth across all segments with a specific focus on large industry verticals including Gaming, HPC, Pro Visualization, Transport, Healthcare, and Autonomous Machines," analyst C.J.