Semiconductor stocks declined Friday as investors reacted to Nvidia Corp’s (NASDAQ:NVDA) earnings and broader uncertainty around artificial intelligence, while rising oil prices and bond gains added to market volatility.
Chip Stocks Slide As Nvidia Weighs On Sector
Semiconductor chip stocks led by Nvidia, Advanced Micro Devices, Inc (NASDAQ:AMD), Broadcom Inc (NASDAQ:AVGO), Taiwan Semiconductor Manufacturing Company Ltd (NYSE:TSM), Intel Corp (NASDAQ:NVDA), Arm Holdings Plc (NASDAQ:ARM), Micron Technology, Inc (NASDAQ:MU), ON Semiconductor Corp (NASDAQ:ON), Super Micro Computer, Inc (NASDAQ:SMCI) traded lower on Friday amid an exciting earnings season.
Chipmakers dragged stocks lower after Nvidia’s results failed to reassure investors about the artificial-intelligence outlook.
On Wednesday, Nvidia reported fourth-quarter revenue of $68.13 billion, up 73% year-over-year and above the Street estimate of $66.0 billion.
The data center segment generated a record $62.3 billion in revenue, rising 75% Y/Y. Gaming and AI PC revenue reached $3.7 billion, up 47% Y/Y.
Looking ahead, Nvidia expects first-quarter revenue between $76.44 billion and $79.56 billion, above the Street estimate of $71.96 billion.
Nvidia said it has secured inventory and capacity to meet demand for the next several quarters, though supply constraints could weigh on the gaming segment in the first quarter and beyond.
Nvidia fell 5.5% despite issuing a bullish forecast, weighing on nearly every stock in a major semiconductor index.
Earnings Across Tech Draw Mixed Reaction
Salesforce Inc (NYSE:CRM) offered a strong long-term sales outlook (for the first-quarter, the company expects revenue between $11.03 billion and $11.08 billion, above analyst estimates) and announced a sizable share buyback of $50 billion and raised its quarterly dividend to 44 cents per share, easing concerns that AI could disrupt the software industry on Thursday.
After the closing bell, Dell Technologies Inc (NYSE:DELL) projected AI server sales above estimates (It expects fiscal 2027 revenue in a range of $138 billion to $142 billion, versus the $125.54 billion estimate).
CoreWeave Inc (NASDAQ:CRWV), which operates AI data centers, posted a larger-than-expected loss. It reported a fourth-quarter adjusted loss of 56 cents per share, missing estimates for a loss of 50 cents per share.
Leading AI spending hyperscalars Meta Platforms, Inc (NASDAQ:META), Apple Inc (NASDAQ:AAPL), Amazon.com, Inc (NASDAQ:AMZN), Tesla Inc (NASDAQ:TSLA) also traded lower on Friday.
Investors delivered a mixed response to earnings as uncertainty around the transformative technology persists.
Hardika Singh of Fundstrat Global Advisors told Bloomberg Nvidia’s strong revenue, net income and guidance did not spark a frenzy because the company rarely misses those benchmarks.
AI Profitability Concerns Create Headwinds
Matt Maley of Miller Tabak said Nvidia delivered solid earnings and guidance, but investors still question whether the company can sustain its elevated gross margins.
Matt Maley of Miller Tabak told Bloomberg that he sees several potential headwinds, including doubts about AI profitability.
He warned that these factors could make the month difficult for stocks.
Meanwhile, oil prices rose after Iran described its nuclear talks with the U.S. as intense, prompting investors to seek safety in bonds.
Price Action: Nvidia shares were down 1.80% at $181.56, Broadcom shares were down 0.95% at $318.63, Advanced Micro Devices shares were down 1.40% at $200.83 and Micron Technology shares were down 0.13% at $415.02 at the time of publication on Friday, according to Benzinga Pro data.
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