Shares of graphics chip maker Nvidia Corp. fell on Wednesday after brokerage Morgan Stanley cut its rating and price target on the company, citing weak demand and pricing pressure on chips. Nvidia shares were down 5.5 percent at $20.13 in morning trade on Nasdaq after earlier falling as low as $19.65. Morgan Stanley analyst Mark Edelstone cut his rating on Nvidia to "Equal-Weight" from "Overweight," cut his 2003 earnings per share estimate to $1.45 from $1.95, his 2004 earnings per share estimate to $1.65 from $2.25 and lowered his price target on the stock to $35 from $90.

In a research note, Edelstone cited three primary factors for the cuts: weak demand for PCs, pricing pressure on graphics processing units, and an expected inventory correction for chips made for Microsoft Corp.'s Xbox video game console. "While we believe that (Nvidia's) valuation parameters are reasonable and the stock remains attractive from a long-term perspective, we believe it will be difficult for (Nvidia) to outperform our universe of semiconductor stocks until near-term earnings pressure, uncertainty, and risk caused by weak PC demand, pricing pressure in the company's graphics products, and an adverse product mix can be eliminated," he said.