Nvidia slashes its fourth quarter guidance, sending its shares into a downward spiral

Chipmaker Nvidia has cut its fourth quarter revenue estimate by $500m (£379.7m) after its performance in China slowed, causing its share price to spiral down more than 18 per cent.

Chief executive Jensen Huang said the firm had suffered an "extraordinarily, unusually turbulent and disappointing quarter", as Nvidia forecasted revenue of $2.2bn for the quarter ending in January, down from an earlier prediction of $2.7bn. 

Consensus estimates had previously predicted revenue in line with Nvidia's original forecasts, according to data from Refinitiv.

Management pointed to "deteriorating macroeconomic conditions, particularly in China" after experiencing weakened demand for its gaming chips in the region. It also received lower-than-expected sales in its data centre business.

Read more: Hyundai hit by first quarterly losses since 2011 as China market fails to drive sales

Nvidia's chips are utilised in high-performance gaming PCs, and in technical mining equipment used to forge cryptoassets such as bitcoin, ether, litecoin and ripple.

A lacklustre performance in its previous fourth quarter forecast in November inspired similar comments from Nvidia, which blamed the "crypto hangover" for poor sales figures. The prices of cryptocurrencies have fallen dramatically since their record high at the end of 2017, some more than 80 per cent in value.

Nvidia is one of many tech firms to be affected by economic instability in China, with names such as Apple, Japan Display and Hyundai all attributing a slowdown in performance to rising tariffs as a result of the US-China trade spat.

Apple is due to report the results of its first quarter tomorrow evening, after the firm revised down its revenue guidance earlier this month for the first time in more than 15 years.

Read more: Apple's sales warning hits European stocks as it places the blame on China

Chief executive Tim Cook has attributed "more than 100 per cent" of its sales decline to lower demand for its products in China.

"Clearly there is never a good time for this type of news, however, the timing of the news, with some large US technology shares reporting this week, and negative sentiment that comes with it, is pertinent," said Jordan Hiscott, chief trader at Ayondo Markets.

At today's low of $131 per share, Nvidia's stock is down more than 55 per cent since achieving a record high in October last year at $292 per share.