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One comment from a Semiconductor Company is enough to drag down similar company shares
NVIDIA Corporation (NVDA) shares dropped today despite no company-specific news. Instead, investors are likely digesting remarks made by Intel Corporation (INTC) management on the company's conference call yesterday
In the first quarter, INTC topped Wall Street's top and bottom line predictions but the company's CEO, Pat Gelsinger, noted certain recurring challenges in the semiconductor area, which NVDA investors seized on.
First, according to Gelsinger, "component supply restrictions remain an issue, with the most recent COVID lockdowns in Shanghai adding to supply chain risk and contributing to inflationary pressures that are having a negative impact" on the company's Total Addressable Market (TAM).
China has enacted a stringent zero-COVID policy, which has led to towns being shut down when coronavirus outbreaks occur, slowing chip manufacturing for some industries. Gelsinger predicts more hardship coming, which adds to NVDA investors anxieties.
"The chip scarcity cost the US economy $240 billion last year and we expect the sector to face problems in areas like foundry capacity and tool availability until at least 2024," he stated on INTC's most recent earnings call.
These statements regarding the semiconductor market today certainly irritated NVDA investors, and they come as the tech company's stock has already dropped 22% in the last six months. When NVDA announces its first-quarter earnings on May 25, stockholders will have a clearer view of how the firm is actually doing. However, with the semiconductor sector now facing supply chain challenges and NVDA's peers having similar issues, NVDA investors could expect additional share price volatility in the near future.
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Lakefield International's PR Manager Shiela Wong
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