Nvidia Inc. (NVDA - Get Report) shares plunged after the chipmaker cautioned that quarterly revenues would fall far short of analysts forecasts following weaker-than-expected demand for its gaming and datacenter products and slowing growth in China.
Nvidia said sales for the three months ended on Jan. 27, its fiscal fourth quarter, would come in at $2.2 billion compared to earlier guidance of $2.7 billion. The company also said GAAP and non-GAAP margins would be hit by charges of around $120 million, adding that after a number of deals for its latest Turing graphics chips failed to close over the final months of the year as customers potentially waited for lower prices and demonstrations of the technology in actual games.
"Q4 was an extraordinary, unusually turbulent, and disappointing quarter," said CEO Jensen Huang. "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," Huang added. "We have excellent strategic positions in all of them."
Nvidia shares lost 13.9% to close at $138.01, while U.S. listed chipmakers followed suit, with Advanced Micro Devices (AMD - Get Report) slumping 8% and Applied Materials (AMAT - Get Report) down 1.3%.
The specific citation of China as the catalyst for the revenue warning follows similar caution from Caterpillar (CAT - Get Report) earlier in the session after the industrial equipment maker posted its biggest quarterly earnings miss in a decade and said 2019 profits would like fall short of analysts's forecasts.
"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," CEO Jim Jim Umpleby said.
Caterpillar shares fell 9.1% to $124.37, trimming the stock's three-month gain to about 10% and valuing the Peoria, Ill.-based Dow component at about $73 billion.