Shares of NVIDIA (NASDAQ:NVDA) were down 15.2% as of 1 p.m. EDT Monday after the graphics chip leader lowered its fourth-quarter outlook.
NVIDIA now expects fourth-quarter revenue of $2.2 billion, plus or minus 2%, representing a 24% year-over-year decline and well below the $2.7 billion midpoint of its previous range. The company also told investors to expect adjusted gross margin to arrive at roughly 56%, plus or minus 100 basis points, down from its previous outlook for 62.5%, plus or minus 50 basis points.
NVIDIA explained that revenue from both its gaming and data center segments fell short of expectations. On the former, the company elaborated that while it anticipated a sequential decline due to excess inventory following the recent cryptocurrency boom, "deteriorating macroeconomic conditions, particularly in China, impacted consumer demand for NVIDIA gaming GPUs."
On the latter, NVIDIA says some data center deals did not close as anticipated during the quarter "as customers shifted to a more cautious approach."
Founder and CEO Jensen Huang stated:
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. The markets we are creating -- gaming, design, HPC, AI and autonomous vehicles -- are important, growing and will be very large. We have excellent strategic positions in all of them.
As it stands, NVIDIA will release its final fourth-quarter results after the market closes on Feb. 14. Given the guidance reduction in the meantime, however -- and with the caveat that its long-term story appears to remain firmly intact -- it's no surprise to see NVIDIA stock plunging today.
Check out the latest NVIDIA earnings call transcript.