May 1, 2024
Nvidia (NVDA) shareholders experienced a sudden jolt as the stock price took a tumble following an underwhelming outlook from rival AI chipmaker Advanced Micro Devices (AMD). The semiconductor industry, known for its volatility, reacted swiftly to the news, with both Nvidia and AMD stocks experiencing significant fluctuations.
AMD’s Earnings Report and Guidance
Late Tuesday, AMD reported earnings that matched Wall Street’s expectations for the first quarter. However, sales fell slightly short of estimates. Investors were particularly interested in AMD’s sales outlook for the current quarter, hoping for a boost from the company’s MI300 AI accelerator business. While AMD raised its 2024 revenue target for MI300 to “at least $4 billion,” some analysts were anticipating even more ambitious figures—possibly in the range of $4.5 billion to $5 billion.
The tepid guidance from AMD sent shockwaves through the market, especially given the intense competition between AMD and Nvidia in critical areas such as graphics cards and data centers. Investors had been closely monitoring AMD’s progress, and any deviation from expectations had an immediate impact on both companies’ stock prices.
Nvidia’s Reaction
In midday trading on May 1, 2024, AMD stock plummeted more than 9% to $143.21. Meanwhile, Nvidia’s stock retreated roughly 5% to $821.39. The decline in Nvidia’s share price reflects the market’s sensitivity to competition and profit expectations. As AMD aims to gain ground in the AI and data center markets, Nvidia faces increased pressure to maintain its dominance.
Skyworks Solutions and the Broader Semiconductor Market
The repercussions extended beyond Nvidia and AMD. Skyworks Solutions (SWKS), a wireless-chip maker, also delivered its quarterly report. Although it beat expectations for the March quarter, Skyworks guided well below views for the June quarter. Skyworks’ heavy exposure to the declining smartphone market contributed to its stock plummeting 15.4% to $90.13 on the same day.
The Philadelphia Semiconductor Index (SOX), which includes the 30 largest semiconductor stocks traded in the U.S., slid 3.9%. The overall sentiment among investors was cautious, as they assessed the implications of AMD’s guidance and the broader industry dynamics.
Conclusion
The semiconductor landscape remains dynamic, with fierce competition driving companies to innovate and adapt. As AMD continues to challenge Nvidia’s position, investors will closely monitor developments in AI, data centers, and other key segments. The recent market reactions underscore the importance of staying informed and vigilant in an ever-evolving industry.
