Market Overview

Nvidia Cuts Q4 Sales Guidance, Chips Stocks Tumble

Nvidia Cuts Q4 Sales Guidance, Chips Stocks Tumble

Shares of NVIDIA Corporation (NASDAQ: NVDA) were trading lower by more than 15 percent Monday morning after the semiconductor company cautioned investors its fourth-quarter results will come in worse than previously expected due to poor performance in the Gaming and Datacenter business segments.

What Happened

Nvidia said it expects fourth-quarter revenue to come in at $2.2 billion, which marks a decrease from management's prior guidance of $2.7 billion. The company said its revenue revision is due to:

  • A deterioration of macroeconomic conditions especially in China, which negatively impacted consumer demand for its gaming GPUs;
  • Lower than expected sales of high-end GPUs with the new Turing architectures; and
  • Datacenter customers who were expected to sign contracts in December decided instead to take a "more cautious approach."

Why It's Important

Nvidia's announcement coupled with a similar sales warning from Caterpillar Inc. (NYSE: CAT) contributed in part to the Dow's sell-off Monday morning. It's particularly concerning that the two companies cited China-related headwinds, according to Baird's Bruce Bittles. He told CNBC investors "will need to feel more positive that trade worries are on the decline and global growth concerns are abating."

Here is a quick summary of how other chip and semiconductor peers performed following Nvidia's announcement:

  • Intel Corporation (NASDAQ: INTC) down 1.4 percent.
  • NXP Semiconductors NV (NASDAQ: NXPI) down 1.5 percent.
  • Micron Technology, Inc. (NASDAQ: MU) down 1.7 percent.
  • QUALCOMM, Inc. (NASDAQ: QCOM) down 1.6 percent.
  • STMicroelectronics NV (NYSE: STM) down 3.4 percent.
  • Advanced Micro Devices, Inc. (NASDAQ: AMD) down 8 percent.

What's Next

Nvidia CEO Jensen Huang said in the press release the foundation of its business remains "strong and more evident than ever." The markets the company services, namely gaming, design, HPC, AI and autonomous vehicles, remain "important, growing and will be very large."

"We have excellent strategic positions in all of them," Huang said.

Nvidia traded down 15.4 percent to $135.39 at time of publication.

Related Links:

Big Chip Earnings Preview: AMD Set To Report Amid Changing Competitive Landscape, Cycle Risk

Morgan Stanley's Key CES Takeaways For Semi Companies

Posted-In: China DatacenterAnalyst Color News Guidance Top Stories Movers Trading Ideas Best of Benzinga


Related Articles (AMD + CAT)

View Comments and Join the Discussion!
Need corporate guidance data?
Click here to see licensing options.

Latest Ratings

KEMB. Riley FBRDowngrades27.2
ROKGabelli & Co.Downgrades
SSRMB. Riley FBRUpgrades23.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Spread Between Retail And Rack Diesel Price Could Compress Carrier Margins In January

10 Biggest Price Target Changes For Monday