NVIDIA's market cap falls by $170 billion after quarterly report

Shares of U.S. graphics processor developer NVIDIA fell 3.9% in after-hours trading on the NASDAQ stock exchange on August 27 to $174.51 per share. Quotes ended the day virtually unchanged in the main session. The sell-off wiped more than $170 billion from the company's market capitalization. The decline continued in pre-market trading on Thursday, with shares falling another 1.6%.

The drop in stock prices followed the company's release of its second-quarter financial report and forecasts for the current period. Despite the fact that NVIDIA beat analysts' expectations for the past quarter and provided a revenue forecast for the current quarter that was higher than average estimates on Wall Street, investors reacted negatively. The main reasons were a slowdown in revenue growth in the key data center division, as well as uncertainty related to the prospects for deliveries of new chips to the Chinese market.

The sales forecast for the current quarter was perceived by the market as subdued. The company expects revenue of about $54 billion.

Regulatory issues have been a particular concern for investors. CEO Jensen Huang expressed hope that sales in China would resume after the company fulfilled the terms of its agreement with the U.S. government to pay fees. However, due to the lack of final rules and the unclear position of Chinese regulators, NVIDIA excluded potential revenue from sales in China from its forecast and warned of possible litigation.

In terms of last quarter's results, NVIDIA's revenue grew 56% year-over-year to $46.74 billion, while net income increased 59%. While the growth in dollar terms was significant, in percentage terms it was the lowest in two years. Revenue from its core data center unit, at $41.1 billion, fell just short of analysts' average forecast. The company also announced a new $60 billion share buyback program.