Nvidia (NVDA) and other semiconductor stocks fell on Tuesday on reports of weak industry sales and an economic slowdown in China.
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The Philadelphia Semiconductor Index (SOX) fell 7.8% on the stock market today. The SOX includes the 30 largest semiconductor stocks traded in the United States.
AI chip giant Nvidia continued to fall after reporting its earnings. Nvidia shares fell 9.5% to close at 108.
Other AI chip makers also fell. Advanced Micro Devices (AMD) fell 7.8% to 136.94, Broadcom (AVGO) fell 6.2% to 152.79, and Marvell Technology (MRVL) fell 8.2% to 70.02.
Other major semiconductor stocks also fell
Semiconductor design company Arm Holdings (ARM) fell 6.9% to 123.74, and wireless chip maker Qualcomm (QCOM) fell 6.9% to 163.24.
Two semiconductor stocks on the IBD 50 list of elite stocks were also hit hard. Chipmaker Taiwan Semiconductor Manufacturing Co. (TSM) U.S. shares fell 6.5% to 160.49. Audio chip vendor Cirrus Logic (CRUS) fell 5.6% to 137.47.
Other big semiconductor companies whose shares fell on Tuesday included Texas Instruments (TXN) and Analog Devices (ADI). TI shares fell 5.8% to 201.83, while ADI shares fell 6.5% to 218.71.
Shares of memory chip maker Micron Technology (MU) fell 8% to 88.58.
Negative reports weigh on semiconductor stocks
Jordan Klein, a trading desk analyst at Mizuho Securities, said investors are likely looking to reduce their exposure to semiconductor stocks amid growing risks of an economic “hard landing.”
Klein told IBD that Tuesday’s trading action exhibited characteristics of quantitative trading.
Semiconductor stocks reacted negatively to some of the reports.
First, data released on Saturday showed that China’s manufacturing activity contracted for a fourth straight month in August, Bloomberg reported. The news is the latest sign that the world’s second-largest economy may struggle to meet its growth targets for this year.
“The China data over the weekend was not good,” Klein said.
Second, the Semiconductor Industry Association reported Tuesday that semiconductor sales in July were unseasonably weak.
UBS analyst Timothy Arcuri said the 11.1% decline in semiconductor sales from June to July was below the averages over the past five and 10 years.
“Memory was the primary driver of declines,” Arcuri said in a client note. “Major segments such as MCU (microcontroller unit), DSP (digital signal processor) and analog all posted declines worse than their respective seasonal trends over the past five and 10 years.”
To read more coverage on consumer technology, software and semiconductor stocks, follow Patrick Seitz on X (formerly Twitter) at @IBD_PSeitz.
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