Nvidia's Shares Sink on Analyst's Warning

A year ago, Nvidia's stock was trading between $36 and $39 as the company dominated the market for graphics processors used in PCs.

The company fell upon hard times beginning this summer, when rival ATI - owned by Advanced Micro Devices(AMD Quote) - released a graphics chip that offers consumers impressive performance at a low price, forcing Nvidia to cut its own prices.

Nvidia's problems got worse in July, when it revealed that some of its previous generation of graphics chips were affected by a glitch that caused them to malfunction. In August, Nvidia took a $196 million charge to cover warranty costs, but reassured investors when it said it did not expect any more charges as a result of the incident.

According to McConnell, the "fallout" from the chip defects will push its market share in notebooks to below 50%.