GPU Gluts, Estimate Cuts Coming, and AMD Valuation

Crypto crash implications for GPUs, Estimate cuts and inventory problems at at Fabless companies

The catalyst I’ve been waiting for has finally happened. The recent crypto implosion has moved GPUs below MSRP. I’ve been waiting for crypto to crash all year - first on March 10th and the potential of ETH 2.0, and once again after earnings. I did some stress testing on what an implosion case would look like, and the bear case now looks like the bull case.

Since my initial posts, the crypto crash has accelerated and has made many miners unprofitable. The results are expected - GPUs are now below MSRP prices on the secondary markets, and the stampede of used inventory will likely become a flood as prices collapse. Why buy a new GPU at MSRP when you can upgrade to the flagship GPUs at the same price?

GPUs that were once trading at 2x MSRP price have now blown through MSRP and are trading at a discount to the secondary market. Additionally, if you check eBay, the GPU market is being flooded by exiting miners. This is identical to the last crypto cycle, and I believe the supply will overwhelm demand.

The used prices on GPUs have plunged straight through MSRP