Cramer on Nvidia warning: 'If you wanted to issue a call for why you should sell stocks, this is it'

  • Nvidia lowering its revenue guidance for the fiscal fourth quarter may be a warning sign to investors to sell stocks, CNBC's Jim Cramer says.
  • "If you wanted to issue a call for why you should sell stocks, this is it," he adds.

Nvidia lowering its revenue guidance for the fiscal fourth quarter may be a warning sign to investors to sell stocks, CNBC's Jim Cramer contended Monday.

"If you wanted to issue a call for why you should sell stocks, this is it," Cramer said on "Squawk on the Street" shortly after Nvidia announced its warning. "And you're going to have a lot of people that immediately say, 'Listen all those stocks that moved last week should not have moved.'"

Shares of chipmaker Nvidia plunged 15 percent early Monday, after citing "deteriorating macroeconomic conditions, particularly in China." Nvidia now expects quarterly revenue of $2.2 billion, down from previously stated guidance of $2.7 billion.

Cramer previously said he's been worried about a shortfall at the company because its chips were being widely used for cryptocurrency mining, which he saw as a fad. Once sky-high prices of cryptocurrencies, of which bitcoin is the largest, have collapsed.

In the past year, Nvidia became less a chipmaker than a catch-all computing company, producing high-powered graphics processing units, or GPUs.

While Cramer, host of "Mad Money," has previously characterized Nvidia CEO Jensen Huang as a "visionary" and possibly the "[Albert] Einstein of our era," he has alsowarned against buying shares of Nvidia.

The Nvidia warning along with the list of U.S. companies facing revenue challenges in China is going to leave investors with the sentiment that "China is bad," Cramer said.