Chip stocks dip as Nvidia sinks; Qualcomm downgraded
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Semiconductor stocks were largely in the red on Wednesday, led by sharp weakness in Nvidia (NASDAQ:NVDA).
Nvidia (NVDA) slumped more than 5% even as Citi reiterated its buy rating after the company unveiled its GH200 Grace-Hopper superchip yesterday.
"This falls in line with our expectations that NVIDIA will provide new versions of its AI accelerators with higher bandwidth and capacity given AMDâs strategy to offer more in-chip memory in its upcoming MI300 GPUs than the H100," analyst Atif Malik wrote in an investor note.
On Monday, investment strategists at Morgan Stanley said the AI bubble is in the "later innings," using Nvidia (NVDA) and other large-cap tech stocks as a proxy.
AMD (AMD) shares lost 3.6%, while Intel (INTC), which competes with both AMD and Nvidia, lost 1.5%.
Tangentially, Wedbush Securities analyst Matt Bryson said the quarterly results from Super Micro Computer (SMCI) still support the "strong uptick" for generative AI capabilities, with a read through seen as "mixed to positive" for Nvidia (NVDA), given that Nvidia is still largely the dominant player in GPUs for large language models.
Super Micro (SMCI) shares fell more than 22% on more than three times the average daily volume.
Qualcomm (NASDAQ:QCOM) shares slipped 0.6% as investment firm Daiwa Capital downgraded the semiconductor firm, citing weakness in the Chinese market and overall consumer demand.
Broadcom (AVGO) dropped 3.2% while NXP Semiconductors (NXPI) lost 0.4% in sympathy.
On Wednesday, the Biden Administration talked up the success of the U.S. CHIPs Act, saying that more than 460 companies have funding interest from the legislation, which is designed to make America more competitive on a global scale related to semiconductor manufacturing.
Taiwan Semiconductor (NYSE:TSM) slipped 0.7% after the company formalized its plans for a â¬10B plant in the German city of Dresden.
Taiwan Semiconductor (TSM) will own 70% of the joint venture, while Bosch, Infineon (INFNNY) and NXP each hold a 10% equity stake, subject to regulatory approvals and other conditions. The fab will be operated by the Taiwan-based global foundry.
Most other semiconductor stocks were also in the red on Wednesday, including Analog Devices (ADI), ON Semiconductor (ON) and Micron Technology (MU). Texas Instruments (TXN) bucked the trend, gaining more than 1%.
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