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AMD, Intel Stock Take Hit After Nvidia Lowers Sales Forecast

News of Nvidia slashing its sales forecast due to weaker data center and gaming sales had an immediate impact on AMD and Intel, whose stock prices both sank Monday morning.

The news that Nvidia was cutting the sales forecast for its most recent quarter had an immediate impact on AMD and Intel, whose stock prices both sank Monday morning.

The damage was more acute for AMD, whose stock price sank as much 7 percent. The company, which reports earnings on Tuesday, competes directly with Nvidia in both the client and server markets for GPUs, the two areas of weakness Nvidia cited in its lower forecast for the fourth quarter in 2019.

[Related: Intel CPU Shortage To Ease By Mid-2019, Interim CEO Says]

At CES 2019 earlier this month, AMD announced that its 7-nanometer Ryzen client CPU and EPYC server CPU will come out by mid-2019, months before Intel is expected to release new client and sever CPUs based on its 10nm manufacturing process. The company also announced that its 7nm Radeon GPU will launch on Feb. 7 for $699, putting it in competition with Nvidia's top-tier gaming GPU, the GeForce RTX 2080.

Intel, in the meantime, saw its stock price decline more than 1 percent on Monday morning. The company initially suffered shareholder flight last week after reporting diminishing growth in data center sales in its fourth quarter, which the company expects to last until the second half of 2019. While Intel doesn’t have GPU products that directly compete with Nvidia, some enterprises are starting to turn to GPUs to handle high-performance computing applications.

Intel's Data Center Group, its largest revenue driver outside of its PC business, only grew 9 percent year-over-year to $6.1 billion in Q4, a retreat from several quarters of double-digit growth. Bob Swan, the company's interim CEO, said the slower sales were the result of lower demand from cloud service providers and Chinese customers. The company also saw demand from enterprise and government customers slip.

Nvidia cut its revenue forecast for Q4 from roughly $2.7 billion to roughly $2.2 billion, which it said was the result of lower demand for gaming GPUs in China and lower demand for its new line of GeForce RTX graphics cards based on the company's new Turing architecture. The company said data center sales also fell short because of enterprise customer exercising caution and not closing deals.

As a result, Jensen Huang, Nvidia's CEO and founder, called Q4 "extraordinary, unusually turbulent and disappointing." At the same time, he said the company's foundation "strong and more evident than ever."

"The accelerated computing model NVIDIA pioneered is the best path forward to serve the world’s insatiable computing needs," he said in a statement. "The markets we are creating – gaming, design, HPC, AI and autonomous vehicles – are important, growing and will be very large. We have excellent strategic positions in all of them."

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