3 Common Inaccuracies About NVIDIA's Cryptocurrency and Artificial Intelligence Businesses

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NVIDIA (NASDAQ: NVDA) stock has been a huge winner in recent years. Since 2016, shares have returned 640%, versus the S&P 500's nearly 40% return. This exceptional performance has left investors hungry for articles about the fast-growing graphics processing unit (GPU) specialist and artificial intelligence (AI) player, which in turn means that financial writers are coming out of the woodwork to meet this demand.

If said woodwork was filled only with folks who were both capable of grasping meaty tech topics and willing to do adequate homework before gracing the digital world with their words and analysis, this en masse emergence wouldn't be an issue. Not surprisingly, however, this isn't the case. Certainly, we all make occasional errors, but there's no excuse for getting key things wrong -- at least, repeatedly wrong -- because of doing nil, or considerably inadequate, research.

Here are three things that I've read -- including on some well-regarded sites -- on multiple occasions that are wrong, with at least some of them a sign that you should probably be skeptical about the rest of the content of a particular article.

The arrow of a compass pointing North to the word FACTS.
The arrow of a compass pointing North to the word FACTS.

Image source: Getty Images.

1. Calling NVIDIA a "bitcoin play"

This is a very common and timely error. I think what happens here is that some writers see mention that "NVIDIA is a cryptocurrency play" (which is true), do no digging, and make the inaccurate leap to "NVIDIA is a bitcoin play," because bitcoin is the best-known digital currency as a result of being the oldest and largest crypto, by market cap.

The accurate information: NVIDIA's GPUs are generally considered ideal for "mining," or generating, emerging cryptocurrencies that require mining. (This still includes Ethereum, the second largest crypto, as well as some other smaller digital currencies.) Once such a digital currency gets large enough, however, someone will build an application-specific integrated circuit (ASIC) to mine it, and others will increasingly follow suit, making a GPU a second-rate tool for mining that particular cryptocurrency. This scenario happened to bitcoin, and it will eventually happen to other cryptocurrencies if they continue to increase in value and maintain the need to be mined. NVIDIA CEO Jensen Huang covered this information in detail on at least one of the company's quarterly earnings calls in fiscal 2018, so it's not hard to find. A quick internet search also does the trick.

2. Providing an exact quantification of NVIDIA's cryptocurrency business

I've seen some articles that provide an exact quantification of NVIDIA's cryptocurrency business in terms of the dollar amount of revenue generated in a particular quarter or other time period, and/or the percentage of total revenue that crypto sales comprised.