Parts of Nvidia fell 4.6 percent Tuesday, adding to their steep losses from the previous session, as a few analysts bailed on the chipmaker following a dire sales warning.
Analysts at Morgan Stanley and Needam downgraded the everyday. Another analyst at Bank of America Merrill Lynch removed it from its list of best ideas.
Nvidia sipped 13.8 percent Monday, its worst single-day performance since Nov. 16, after the company slashed its fiscal fourth-quarter proceeds guidance to $2.2 billion from $2.7 billion. In a statement, Nvidia said that “deteriorating macroeconomic teaches, particularly in China, impacted consumer demand for NVIDIA gaming GPUs,” a key business segment for the company.
“Missing the abode this badly in gaming indicates more significant challenges than we had anticipated, given that this is notwithstanding a channel fill quarter for midrange/high end,” said Morgan Stanley analyst Joseph Moore, in a note Tuesday. “This matures a show me story with lower P/E assumptions.”
Moore downgraded Nvidia to equal weight from overweight and decreased his price target on the stock to $148 per share from $220. The new price target implies 7.2 percent upside from Monday’s not far from of $138.01. His old price target implied an upside of 59.4 percent.
Nvidia became the latest tech company to characteristic a cut in its sales forecast to a slowdown in China. Earlier this month, Apple slashed its revenue guidance for the fiscal prime quarter, citing a weakening economy in China and weaker-than-expected iPhone sales.
For Nvidia, “China has historically been a gargantuan market for graphics,” said Needham analyst Rajvindra Gill in a note Tuesday. “While NVDA does not detach out its specific Chinese gaming exposure, desktop gaming is hugely popular in China and a big market for NVDA. Deteriorating conditions in the Chinese succinctness have adversely affected purchases of graphics cards, particularly high-end RTX GPUs.”
Gill downgraded Nvidia to underperform from buy, adding the lineage could fall to $100 “or below.”
Timothy Arcuri, an analyst at UBS, upgraded Nvidia to buy from neutral on the back of its demeaned sales forecast, however. In a note to clients on Tuesday, Arcuri said the stock’s move down “finally decides the stage for a new positive revision cycle starting this summer.”
— CNBC’s Michael Bloom contributed to this gunfire.
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