David Paul Morris | Bloomberg | Getty Images

Jen-Hsun Huang, president and chief executive officer of Nvidia Corp., speaks during the company’s event at the 2019 Consumer Electronics Show (CES) in Las Vegas, Nevada, U.S., on Sunday, Jan. 6, 2019.

Bernstein downgraded semiconductor stock Nvidia on Monday to market-perform from outperform, saying the company is facing severe challenges to growth while, at the same time, “headline risk [is] likely to continue increasing.”

“Following the company’s somewhat chilly guidance cut … we believe the shares are likely to remain hamstrung,” Bernstein analyst Stacy Rasgon said in a note to investors.

Ahead of earnings on Feb. 14, Nvidia lowered its revenue guidance for the fiscal fourth quarter citing “deteriorating macroeconomic conditions, particularly in China.” This was Nvidia’s second forecast cut in the past three months.

“The latest cut appears much more fundamentally demand-driven, with the question of the “true” run-rate of the gaming business remaining up in the air for now,” Bernstein said.

Nvidia shares slid 1 percent in premarket trading from Friday’s close of $148.17 a share. Bernstein has a price target on Nvidia of $175 a share.

After five years of monster gains, the hot stock cracked in 2018. The shares are down more than 40 percent the last 6 months.

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