- Chipmaker blames weak demand from China
- Stock falls 12.8%
- Rivals also suffer falls
Citing weak demand from China, Nvidia has cautioned that its quarterly earnings will be far lower than forecasts predicted. The chipmaker’s stock fell sharply after the announcement on Monday, dropping 12.8% to hit $139.64.
Nvidia gaming and data center products are suffering from a weaker than expected demand as revenues have been hit by slowing growth in China.
The company said that sales for its fiscal fourth quarter, the three months ending on January 27, are expected to be $2.2 billion as opposed to earlier estimates of $2.7 billion.
CEO Jensen Huang said: “Q4 was an extraordinary, unusually turbulent, and disappointing quarter.”
“Looking forward, we are confident in our strategies and growth drivers. The foundation of our business is strong and more evident than ever – the accelerated computing model NVIDIA pioneered is the best path forward to serve the world’s insatiable computing needs,” Huang added.
The CEO went on to cite gaming, AI and autonomous vehicles as just three elements of Nvidia’s operations that offer future growth potential. “We have excellent strategic positions in all of them,” he said.
Other U.S. chipmakers also saw drops in stock values after the Nvidia warning. Micron Technology shed 4.77%, while Advanced Micro Devices (AMD) saw a bigger decrease of 7%.
It isn’t just the tech sector that is feeling the pinch from China’s ongoing woes. Industrial equipment maker Caterpillar has posted quarterly earnings that saw the company’s biggest miss in ten years and said this year’s profits are likely to fall short of analysts’ forecasts.
CEO Jim Umpleby said: “Our outlook assumes a modest sales increase based on the fundamentals of our diverse end markets as well as the macroeconomic and geopolitical environment. We will continue to focus on operational excellence, including cost discipline, while investing in expanded offerings and services to drive long-term profitable growth.”