Nvidia tells the truth, and tempers a potential rally for chip stocks

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For months, chip companies have been telling investors that a rebound is right around the corner, but Nvidia is starting to have a more honest outlook.

For months, chip companies have been telling investors that a rebound is right around the corner. As MarketWatch warned months ago, there was little evidence to back up those claims, and Nvidia Corp. admitted as much Thursday afternoon, throwing a wet blanket on an after-hours bounceback for its beleaguered stock and shares in other chip companies.

“The data-center spending pause around the world will likely persist in the second quarter and visibility remains low,” Chief Financial Officer Colette Kress said in a conference call Thursday, later adding “we are returning to our practice of providing revenue outlook one quarter at a time.”Immediately after that statement, a 7% after-hours gain for Nvidia shares dissipated to nearly nothing, before bouncing back to a 2% gain as the extended session neared the close.

The reality is that this could be a temporary slowdown that will end by the time 2020 rolls around, or it could be the beginning of the end for the massive cloud data-center build-out that has supported the tech boom even as the mobile-phone market has stagnated and personal-computer sales continue to struggle.

 

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