Nvidia shares tumbled over 18 percent in premarket trading Friday after missing on revenue and guidance in its third quarter 2019 earnings report.
The company missed analyst expectations of $3.24 billion per Refinitiv, with the company recording $3.18 billion for the quarter. Guidance for the fourth quarter was $2.70 billion, plus or minus 2 percent, excluding certain items. That compares to the Refinitv consensus estimate of $3.40 billion.
Surplus inventory weighed heavily on the company's fourth quarter guidance. On a call with analysts following the report Thursday, CEO Jensen Huang said it could take up to two quarters to move through the additional inventory.
"Our Q4 outlook for gaming reflects very little shipment in the midrange Pascal segment to allow channel inventory to normalize," Chief Financial Officer Colette Kress said on the call. Revenue for Nvidia's biggest segment, gaming, fell below the $1.89 billion FactSet consensus estimate, coming in at just $1.76 billion for the quarter.
Nvidia's revenue and guidance miss appears to have an effect on one of its closest competitors in the computer chip space, Advanced Micro Devices. AMD was down more than 7 percent in premarket trading.
—CNBC's Jordan Novet contributed to this report.
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