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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,
were falling 7% in Thursday afternoon trading and sitting 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.
Read: Why Nvidia’s AI bonanza may have only just begun
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 3.4% in Thursday afternoon trading.
Other notable laggards were Marvell Technology Inc.
MRVL,
and Super Micro Computer Inc.
SMCI,
both of which were off more than 5%. Marvell reports its own earnings after Thursday’s closing bell.
The PHLX Semiconductor Index
SOX
was down about 2% with about two hours left of trading.
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. Case in point: Analog Devices Inc.
ADI,
gave downbeat guidance Wednesday morning, but its stock still ended that session slightly higher as it got swept up “in the rally that was really all [Nvidia] excitement vs anything else.”
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.
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