Nvidia warns of lower revenue on gaming weakness

STORY: Shares of Nvidia sank on Monday, after the chipmaker warned in preliminary results that its second-quarter revenue would drop by 19% on weakness in its video game chip business.

It comes just days after Intel and PlayStation maker Sony slashed their annual forecasts on demand concerns.

And, last month, Xbox-maker Microsoft reported a slump in gaming revenue, while Sony warned of waning consumer interest amid a lack of new video games and fewer health restrictions keeping gamers at home.

Nvidia said its gaming unit's preliminary revenue, which includes sales of high-end graphic cards for desktops and laptops, declined 44% from the previous quarter.

The gaming industry, largely considered to be recession proof, is beginning to see some weakness as consumers are weighing purchases of discretionary items such as laptops and video game consoles amid high inflation.

Meanwhile, worsening global supply-chain snags have hit chipmakers overall.

Nvidia, which now expects second-quarter revenue of about $6.7 billion compared with the $8.1 billion it had forecast earlier, is scheduled to report results on Aug. 24.