By Max A. Cherney, Arsheeya Bajwa

(Reuters) – Nvidia forecast fourth-quarter revenue slightly above estimates on Wednesday, but still fell short of high expectations from some investors that have made it the world’s most valuable company.

Shares of the Santa Clara, Calif.-based company fell about 2% in extended trading. They had closed down 0.8% in the regular trading session.

The company forecast revenue of $37.5 billion, plus or minus 2%, for the fourth quarter, compared with analysts’ average estimate of $37.09 billion, according to data compiled by LSEG.

Still an incredible growth rate thanks to huge demand for the company’s chips that form the brains of complex generative AI systems, it marks a clear slowdown from previous quarters when Nvidia mostly reported sales that at least doubled.

“The age of AI is in full swing, driving a global shift to NVIDIA computing,” said Nvidia CEO Jensen Huang. “Demand for Hopper and anticipation for Blackwell – in full production – are incredible as basic model makers scale pre-training, post-training and inference,” he said, referring to two high-performance AI chips.

Nvidia’s fourth quarter forecast indicated that the company’s revenue growth will slow to around 69.5% from 94% in the third quarter.

Expectations were high ahead of the results, with Nvidia shares up more than 20% in the past two months and hitting an intraday high on Monday. The stock has nearly quadrupled so far this year and is up more than ninefold in the past two years.

“Investors have gotten used to huge beats from this company, but doing so is getting harder and harder,” said Ryan Detrick, market strategist at Carson Group. “This was still a very solid report, but the truth is, when the bar is that high, it just gets that much tougher.”

While demand for the company’s chips is soaring, supply chain problems have made it harder for Nvidia to report the big earnings that have helped make it a Wall Street darling.

One of the bottlenecks for its chip supply has been the limited capacity for advanced manufacturing technology at the company’s manufacturing partner TSMC.

The company reported third-quarter adjusted earnings of 81 cents per share, compared with estimates of 75 cents per share.

Sales in the data center segment, which accounts for a majority of Nvidia’s revenue, rose 112% to $30.77 billion in the quarter ended Oct. 27. The segment had a growth of 154% in the previous quarter.

Nvidia’s sales are boosted by cloud companies’ continued spending on its chips, as they expand data centers that can handle the complex processing needs of generative AI.

The company said it had fixed a design flaw with its Blackwell chips by changing the blueprints used by TSMC to manufacture it.

“The pattern of potential supply chain issues is clearly causing some concern,” said TECHnalysis Research analyst Bob O’Donnell.

The company said adjusted gross margin shrank to 75%.

(Reporting by Arsheeya Bajwa in Bengaluru; Stephen Nellis and Max A. Cherney in San Francisco; Additional reporting by Noel Randewich in Oakland, Calif. Editing by Arun Koyyur, Sayantani Ghosh and Matthew Lewis)