UPDATE 2-Nvidia quarterly forecast matches Wall St's but stock drops
(Adds detail from conference call)
SAN FRANCISCO May 8 (Reuters) - Chipmaker Nvidia's forecast for current-quarter revenue met analysts' expectations but failed to inspire investors concerned about a slowing PC industry, and its stock lost ground.
With the personal computer sector losing steam and the chipmaker's move into mobile facing relentless competition, Nvidia is heavily promoting its graphics technology for a wider range of applications, including cars and data centers.
Nvidia said in a press release on Thursday that for its fiscal second quarter, which ends in July, it expects revenue of $1.1 billion, plus or minus 2 percent.
Analysts on average expected revenue of $1.084 billion for the quarter, according to Thomson Reuters I/B/E/S.
"In this earnings period, coming in inline for guidance has been viewed as negative because valuations have been moved up. If you're not beating by a lot then your stock is selling off," said Stifel Nicolaus analyst Kevin Cassidy.
On Tuesday, Nvidia released results for the first quarter that beat expectations after a preliminary draft was accidentally emailed internally to about 100 people.
Thursday's report from the chipmaker included new details about its businesses in the first quarter.
Revenue from Nvidia's core PC graphics processor business rose 14 percent to $898 million in the quarter.
While the overall notebook market shrank in the first quarter, demand for its advanced graphics chips for high-end notebooks grew thanks to game enthusiasts, Chief Financial Officer Collette Kress told analysts on a conference call.
She said that in the current quarter, she expects seasonal weakness in demand for graphics chips used in low-end laptops.
In the first quarter, revenue from Nvidia's Tegra processor business rose 35 percent to $139 million due in part to higher volumes for mobile gadgets and automobiles.
As well as tablets, Nvidia's Tegra chips power entertainment and navigation systems in cars made by Volkswagen's Audi, BMW and Tesla. At an event in March, the company showed off a self-driving Audi powered by a Tegra processor.
Nvidia has also been developing graphics components for cloud data centers. It said nearly 600 companies are now testing Nvidia's GRID platform for servers, the chipmaker said.
The company said it expects a second-quarter GAAP gross margin of 53.7 percent and non-GAAP gross margin of 54 percent.
In the first quarter, Nvidia's GAAP gross margin was 54.8 percent and its non-GAAP gross margin was 55.1 percent.
Nvidia shares fell 3.24 percent in extended trading after closing up 1.23 percent at $18.50 on Nasdaq. (Editing by Steve Orlofsky and Eric Walsh)