Nvidia Corp. (NVDA) - Get Report was downgraded by an analyst at Needham & Co. Tuesday after the chipmaking giant announced Monday it will likely see far less revenue than initially expected in its upcoming quarterly report. 

The stock fell 4.6% to close at $131.60 a share in Tuesday's trading. 

Needham's Rajvindra Gill downgraded the stock to underperform from buy - a downgrade of two notches - and removed his price target of $225. He disclosed no new price target.

Nvidia cut its fourth-quarter revenue guidance on Monday to $2.2 billion from $2.7 billion, citing weakening Chinese demand.

"Deteriorating conditions in the Chinese economy have adversely affected purchases of graphics cards, particularly high-end RTX GPUs," Gill wrote in a note released Tuesday.  

There could be even more downside from here, the analyst said.

"Although the shares have fallen sharply, we believe end demand will deteriorate further in its core markets, gaming (54% of sales) and datacenter (25%) driven by an ongoing deceleration in the Chinese economy," Gill said. Not only may revenue slow, but Gill thinks gaming and data center revenue growth will actually decline in 2019, and that Nvidia's gross margin also will fall 500 basis points to 56%.

Therefore, "we believe the stock's P/E multiple will witness a 're-rating' that will bring it closer to the overall group at 18-20x," he said. Nvidia's PE ratio is currently at 22. 

Gill lowered his 2019 revenue estimate for Nvidia to $11.71 billion from $12.21 billion. His earnings-per-share estimate for the year was lowered to $6.58 from $7.23. 

Nvidia's guidance reduction also sent shares of Advanced Micro Devices Inc. (AMD) - Get Report down 7.98% to $20.18 on Monday. AMD reports earnings Tuesday after the closing bell. Nvidia reports on Feb. 14.