Nvidia Corp. today slashed its revenue guidance for the fourth quarter by $500 million, sparking an investor selloff that sent its stock dropping as much as 17 percent.

The graphic card maker’s shares fell nearly 14 percent today, which amounts to more than $14 billion in lost value.

It’s the second major stock price crash to hit Nvidia in recent months. In mid-November, the company’s shares plummeted as much as 19 percent after it reported third-quarter revenue that fell short of analysts’ expectations.

Today’s guidance reduction reflects a continuation of the issues that weighed on its previous earnings report. The company has cut its revenue guidance from $2.7 billion to $2.2 billion for the fourth quarter ended Jan. 27 because of disappointing performance in its gaming and data center businesses.

The gaming unit, which accounts for more than two-thirds of Nvidia’s sales, got caught up in headwinds from multiple directions. One of them is the recent end of the cryptocurrency boom. Nvidia has an excess inventory of previous-generation gaming graphic cards, which were once high in demand by cryptocurrency miners but are now proving a tough sell.

The company’s newer, more expensive chips also aren’t generating enough interest to offset the declining demand for the older products. The reason is twofold.

The company’s latest-generation gaming cards are significantly pricier than their predecessors and their standout feature, a technology called real-time ray tracing for improving the visual fidelity of video games, is currently supported by only a limited number of titles. As a result, Nvidia believes that some game enthusiasts are hesitant to upgrade for the time being. 

Another factor blamed for the guidance reduction is lower demand in China. Nvidia said its gaming unit is seeing lower consumer interest in the country as a result of “deteriorating macroeconomic conditions,” headwinds that have also affected other tech companies. Apple Inc. and Samsung Electronics Co. Ltd. both slashed their earnings projections recently thanks to slowing growth in China.

Nvidia’s data center business wasn’t spared, either. The company is the leading maker of graphics cards for artificial intelligence applications, which has enabled it to strongly capitalize on the rapid enterprise adoption of AI. But that growth slowed in the fourth quarter as well. Nvidia said it closed fewer data center deals than expected as customers took a “more cautious approach” with their spending. 

Photo: Nvidia