Nvidia falls on margin, competition worries

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(Global Markets) - Shares of Nvidia Corp (NVDA.O) fell 6 percent in pre-market trade, despite the chipmaker's strong second-quarter forecast, as investors feared rivals Advanced Micro Devices (AMD.N) and Intel (INTC.O) were stepping up competition.

Several brokerages including Citigroup and Bank of America Merrill Lynch cut their price targets on Nvidia stock, and Needham cut its rating to "hold" from "buy."

Needham said the growth rate at Nvidia's core business -- making graphics chips for PCs -- is slowing and gross margins are declining due to pricing pressure.

The bigger rivals have both launched central processors with integrated graphics, which might erode demand for Nvidia's low-end chips, and tablets are affecting demand for PCs.

Shares of the Santa Clara, California-based Nvidia were down at $19.22 in trading before the bell. They closed at $20.50 on Thursday on Nasdaq.

(Reporting by Sayantani Ghosh in Bangalore; Editing by Don Sebastian)