Susquehanna analyst Christopher Rolland downgraded AMD and lowered NVIDIA's price target on expected competition from Bitmain. The latter is the world's largest Bitcoin miner and the leading maker of cryptocurrency ASICs. Bitmain will soon introduce its first Ethereum ASICs and this is expected to have a major impact on the video card market.
This could be a positive thing for gamers, as reduced mining demand for GPUs may bring the market back to a balance, and result in more normal retail pricing. For investors, Bitmain's Ethereum ASICs could be bad news as AMD and NVIDIA sell a lot of video cards to crypto miners.
Rolland says the firm traveled through Asia last week and confirmed that Bitmain had developed an application-specific integrated circuit (OTC:ASIC) for mining Ethereum with the supply chain readying for Q2 shipments.
The analyst notes that Bitmain will likely become the largest ASIC vendor with 70% to 80% of the market. But there are three other companies also developing Ethereum ASICs.
Rolland estimates mining-related sales make up close to 20 percent of AMD's revenue and 10 percent of NVIDIA's. As such, he downgraded AMD's stock outlook from Neutral to Negative and lowered the price target to $7.50. He didn't downgrade NVIDIA, but lowered the company's price target from $215 to $200.
Yesterday, AMD closed at $10.44 while NVIDIA closed at $244.48.