Investing.com - Nvidia slumped on Monday, sending semis broader lower, after the chipmaker warned it would miss fourth-quarter revenue expectations blaming weaker-than-expected gaming and datacenter growth.
Nvidia (NASDAQ:NVDA) cut its fourth-quarter revenue to $2.2 billion from $2.7 billion as slowdown in China hurt gaming and datacentre growth, sending tis share price more than 13% lower.
Gaming, which makes up the bulk of its overall revenues, was of particular concern, as demand for company's latest slate of graphics cards using Nvidia's Turing architecture was lower than expected.
“Sales of certain high-end GPUs using Nvidia’s new Turing architecture were lower than expected,” the company said.
Datacenter sales fell short of expectations as customers turned cautious and pulled out of deals that were expected to close in the last month of the quarter, the company said.
As well as declining gaming and datacenter growth, lower gross margin was cited as a headwind for the chipmaker.
"While we view the gaming issues as unsurprising, we think the incremental softness on gross margins suggests a continued pause in datacenter," RBC said. "With this in mind, we think the next 3-to-4 months will remain challenging." RBC said.
The slump in Nvidia weighed on semis as Micron Technology (NASDAQ:MU), Broadcom (NASDAQ:AVGO) and NXP Semiconductors (NASDAQ:NXPI) came under pressure.
Philadelphia Semiconductor Index fell 2.4%, erasing some of gains from last week following chipmaker Xilinix's blowout quarterly report.