1 Reason NVIDIA's Explosive Earnings Didn't Boost the Stock

NVIDIA (NASDAQ: NVDA) is seeing accelerating adoption for its chips across several markets, including cloud computing and medical imaging. In its fiscal 2022 first quarter, profits more than doubled year over year, and management expects the momentum to continue in the near term.

Despite the rosy outlook, the stock traded down slightly after the report, but it has since gained 8% since the earnings news. One reason for the volatile trading is some analysts believe the 106% year-over-year increase in gaming revenue was too good to be true. This stems from a comment by CFO Colette Kress in the earnings report that suggests the gaming surge might have experienced a boost from non-gamers. In a statement, Kress said, "We believe gaming also benefited from cryptocurrency mining demand, although it is hard to determine to what extent."

This statement raises a red flag about the sustainability of gaming growth -- NVIDIA's largest business segment. Let's review why the surge in demand from miners might be making investors cautious, and what management is doing about it.

Source Fool.com