Nvidia shares dropped after BMO Capital Markets shared bearish supply chain data on graphics card shipments in a note to clients Sunday.
The stock declined 2 percent midday Monday after the report and is now down by more than 7 percent on the year. Nvidia was one of the best performers in the S&P 500 last year with a 224 percent return.
The firm cited its checks with Asian manufacturers in the technology hardware supply chain, which revealed a graphics card shipment decline of 16 percent from the December quarter to the March quarter versus the down 6 percent average the last three years.
"We believe this represents weakness in the channel versus the super-charged growth we have seen in the past several quarters, particularly for Nvidia's graphics business," analyst Ambrish Srivastava wrote.
"We also believe this data suggests that weakness in Nvidia's gaming business might show up earlier than we had anticipated. We had expected comparisons to become weaker for this business as the year progressed."
Srivastava reiterated his underperform rating on Nvidia. He also reaffirmed his $85 price target in an email to CNBC, representing 15 percent downside from Friday's close.
Nvidia shares are up 176 percent in the past 12 months through midday Monday on the successful launch of its new Pascal graphics chips. However, the stock is down 15 percent since the company's Feb. 9 fiscal fourth-quarter earnings report on concerns over future sales.
— CNBC's Michael Bloom contributed to this story.