Nvidia (NVDA): A Major Alarm For Tech Earnings (DELL)(AMD)(MSFT)

By Douglas A. McIntyre Published Jul 3, 4:24AM EDT

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Anyone who wants to waste the money to take a sledge hammer and break apart a PC will likely find a Nvidia (NVDA) graphics chip in among the rubble.Yesterday, Nvidia warned it would miss its earnings. It would miss them by a mile. The company now expects revenue to be from $875 million to $950 million. Wall St. expected $1.1 billion for the period ending in July.

The stock promptly dropped 25%.

NVDA has been a very good investment. Over the last two years, it has outperformed both the Nasdaq and larger rival Intel (INTC). Over that period, the firm’s stock was up 160% at one point late last year. With the 25% drop it will have done no better than the broader market averages.

The critical part about the NVDA warning is that the company blamed."end-market weakness around the world, the delayed ramp of a next generation MCP, and price adjustments of our GPU products to respond to competitive products." The delay problems is specific to Nvidia. The weakness in demand and price are market issues which are likely to be the earliest signal that chip and PC sales have slowed considerably.

The blind and the optimists will say that the Nvidia numbers are an isolated case. But, it is not true. The company has too many chips in too many computers for that to be a fair assessment.

The downward revision in earnings should frighten holders of Intel, AMD (AMD), Dell (DELL) and Microsoft (MSFT). At least.

Tech was seen as a potential bright spot for Q2 earnings. That just went out the window.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.