(Reuters) -Chip designer Nvidia Corp forecast second-quarter revenue below estimates on Wednesday, bracing for supply chain snags and slowing demand for graphics chips used in gaming devices.
Shares of the company fell 8.8% in extended trading, after declining roughly 40% this year amid a selloff in growth stocks over concerns of aggressive rate hikes.
The forecast included an estimated reduction of about $500 million relating to Russia and the COVID lockdowns in China, the company said.
Weaker graphics chips prices and lower discretionary spending amid high inflation are likely to pressure Nvidia’s gaming business, according to experts.
A rout in the cryptocurrency market could also hurt demand for its GPUs, or graphics processing units, which are favoured by miners of cryptocurrency. Nvidia has said it only has limited visibility into how much this impacts demand.
Demand from data center clients has remained strong, however, as more firms shift to the cloud and incorporate artificial intelligence in their operations.
The company forecast second-quarter revenue of $8.10 billion, plus or minus 2%. Analysts on average expect $8.45 billion, according to IBES data from Refinitiv.
Revenue for the first quarter ended May 1 rose 46% to $8.29 billion.
(Reporting by Chavi Mehta in Bengaluru and Jane Lanhee Lee in California; Editing by Devika Syamnath)
