AMD CEO: Cryptocurrency mining demand for graphics cards will reach equilibrium, with a 15% decline expected in the fourth quarter

Graphics card maker AMD reported a sharp increase in sales in the third quarter of 2017, with huge demand for graphics cards from cryptocurrency miners around the world helping the company.

In an earnings call Tuesday afternoon, the company reported that its Computing and Graphics segment had revenue of $819 million in the third quarter of 2017, up 74 percent from the same period last year.

Although AMD's graphics cards are typically used by gamers, cryptocurrency enthusiasts are quickly adopting these graphics cards for Ethereum and other cryptocurrency mining. In response to this, AMD said that these revenues were mainly driven by the hot sales of its Radeon graphics cards and Ryzen desktop processors, both of which are used for cryptocurrency mining.

In particular, AMD noted that sales of its Vega 56 and Vega 64 graphics cards have risen significantly this quarter. These are the most sought-after devices in the cryptocurrency market due to their significant advantages in processing power over other products.

As growth in other parts of AMD's core business stagnated, the surge in graphics card sales contributed 26% of its total annual revenue of $1.64 billion, the company's highest revenue quarter since 2011.

But despite the eye-popping numbers, the company's shareholders weren't impressed with the third-quarter results.

AMD's stock price eventually fell 12%, from $14.25 to $12.43 in the first few hours of trading on Tuesday, indicating that the investment community is cautious about AMD's revenue, especially in the highly volatile cryptocurrency market, where such gains may be fleeting.

In addition, AMD predicts that cryptocurrency-related revenue may decline in the fourth quarter, with a 15% drop in the fourth quarter compared to the third quarter.

As AMD CEO Lisa Su said during the earnings call:

“In terms of headwinds ... we anticipate that demand for our products will balance out.”

Overall, while Su made some bearish statements about the future of cryptocurrency mining, she also seemed to leave the door open to other opportunities.

She said:

“We think the blockchain business part of this is very attractive and will continue to be attractive in the medium term.”