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Graphics chip maker Nvidia dragged down technology stocks on Thursday despite gains in the broader market, after the company warned on its current quarter.
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The Santa Clara-based chipmaker fell 30.7 percent after lowering its quarterly forecast due to strong competition and weaker demand. It lost nearly $6 in active trading to close at $12.49.
Nvidia said on Wednesday it expects second quarter revenue to range between $875 million and $950 million, with gross margin to be lower than internal expectations. The revenue forecast was below the average analyst estimate of $1.01 billion.
The company "clearly made a poor design decision in the not too distant past, in our opinion, which ultimately led in a price/performance gap large enough to warrant significant price cuts ultimately resulting in the pre-announcement," Wedbush Morgan analyst Patrick Wang told clients.
Nvidia also said it would take a charge of $150 million to $200 million in its second quarter to cover anticipated warranty, repair and return costs associated with a defect on some of its chips.
The Philadelphia Semiconductor Index fell about 1 percent as Intel Corp. lost 1.3 percent and Advanced Micro Devices declined 2.6 percent.
The broader market picked up notable gains in the morning, as a government report on unemployment was not as bleak as some had feared. The Dow picked up 73 points.
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