No one in the chip industry besides Nvidia sounds good, an analyst says
Wall Street is cheering Nvidia Corp.'s blowout results and outlook, but investors aren't extending that enthusiasm to the company's peers as the chip sector sells off sharply in the wake of the latest report.
Shares of Advanced Micro Devices Inc. $(AMD)$ fell 6.97% on Thursday and sat among the S&P 500's SPX biggest laggards on a down day for tech stocks.
Momentum for Nvidia $(NVDA)$ can be a double-edged sword for the rest of the chip industry. While AMD and others have their own AI chips and the potential to benefit from similar tailwinds as those businesses ramp up, Nvidia is far ahead in the artificial-intelligence market.
Additionally, Nvidia's eye-popping revenue forecast and its talk of strong visibility into future demand could be reinforcing a Wall Street fear that spending on AI hardware is eating away at budget share for more traditional chips, something Intel Corp.'s $(INTC)$ management acknowledged in that company's most recent report.
Intel shares were off 4.09% on Thursday.
Other notable laggards were Marvell Technology Inc. $(MRVL)$ and Super Micro Computer Inc. $(SMCI)$, both of which were off more than 5%. Marvell reported its own earnings after Thursday's closing bell.
The PHLX Semiconductor Index SOX was down 3.35% on Thursday.
Mizuho analyst Jordan Klein told MarketWatch in an email that the backdrop for semiconductors is "not great" lately, as "no one" besides Nvidia sounds good.
Chip stocks have been on a weak trend over the past three weeks and are "back on that path as [Nvidia was] not enough in many folks' minds," Klein said.
