The semiconductor industry witnessed a significant downturn on Wednesday, propelled by disappointing guidance from major players Advanced Micro Devices (AMD) and Skyworks Solutions. This downturn rippled through the market, impacting Nvidia, a significant rival in the AI chip space.
AMD’s first-quarter financial results were closely scrutinized by investors. While the company met Wall Street’s earnings expectations, its sales fell slightly short. Of particular concern was the guidance for the current quarter, which didn’t meet the high expectations, especially regarding its MI300 AI accelerator business. Despite raising its revenue target for MI300 to “at least $4 billion” for 2024, analysts had anticipated even higher guidance. The disparity led to at least 12 Wall Street analysts lowering their price targets on AMD stock.
As a result, AMD’s stock price plummeted by 8.9% on the stock market, closing at $144.27. Although Nvidia wasn’t directly affected by AMD’s guidance, its stock also experienced a decline, sliding 3.9% to $830.41.
Analysts like Mark Lipacis from Evercore ISI reassured investors, suggesting that concerns about AMD’s MI300 sales were exaggerated. Lipacis maintained a bullish outlook on the company’s prospects in the AI chip market. However, it’s widely acknowledged that Nvidia currently holds a dominant position in this segment.
In addition to AMD’s performance, Skyworks Solutions, a wireless-chip maker heavily reliant on the smartphone market, reported mixed results for the March quarter and provided guidance significantly below expectations for the June quarter. This news further dampened investor sentiment, leading to a 15.3% decline in Skyworks’ stock price, which closed at $90.30.
Overall, the Philadelphia semiconductor index, tracking the performance of the 30 largest semiconductor stocks in the U.S., experienced a sharp decline of 3.5% amid the negative news from AMD and Skyworks.
Investors and industry analysts will closely monitor developments in the semiconductor sector, particularly regarding the performance of key players like Nvidia, AMD, and Skyworks, to gauge broader market trends and potential investment opportunities.
