Graphics-chip maker Nvidia slashed its revenue outlook for its fiscal second quarter. Nvidia stock tumbled on the news. The Santa Clara, Calif.-based company announced preliminary sales of $6.7 billion for its quarter ended July 31. It will announce official results on Aug. 24.

Data center revenue, though a record, was short of the company's expectations. Nvidia has implemented pricing changes with its sales channel partners. "Our gaming product sell-through projections declined significantly as the quarter progressed," Chief Executive Jensen Huang said in the release. "We took actions with our gaming partners to adjust channel prices and inventory," he said.

Second-quarter results will include about $1.32 billion of charges, primarily for inventory and related expenses, based on revised expectations of future demand. "The significant charges incurred in the quarter reflect previous long-term purchase commitments we made during a time of severe component shortages," chief financial officer says.

At least five Wall Street firms cut their price targets on Nvidia stock after the company's announcement. Rival graphics-chip maker Advanced Micro Devices (AMD) also fell on the news. "This was an ugly negative preliminary announcement," BMO Capital Markets analyst Ambrish Srivastava said.

N Nvidia stock ranks No. 12 out of 34 stocks in IBD's fabless semiconductor industry group. AMD stock dropped 2.2% to 100.07 on Monday. It has an IBD Composite Rating of 83 out of 99. The best growth stocks have a composite Rating of 90 or better.
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