First, it was Nvidia (NVDA) cutting its guidance for revenue and earnings due on August 24.
Today, August 9, it was Micron Technology (MU) warning that its revenue for the fourth-quarter revenue may come in at or below the bottom end of a forecast range provided in the company’s earnings call on June 30. Micron is scheduled to report on September 27.
All this comes as the market is on edge anyway ahead of tomorrow’s report on CPI inflation.
As of the close on Tuesday, August 9, shares of Micro Technology were down 3.74%. Shares of Nvidia were down another 3.97% after closing down 6.30% yesterday.
The damage spread to other chip stocks. Advanced Micro Devices (AMD) was down 4.53% and Qualcomm (QCOM) was lower by 3.59%. Chip equipment maker Applied Materials (AMAT) was off 7.58%
Micron said early Tuesday that fourth-quarter sales are expected to be at the low end of or below its previous guidance as customers reduce their stockpiles of unused chips. There will be “significant sequential declines in revenue and margins,” Micron said in a regulatory filing.
Nvidia had said its second-quarter revenue would drop by 19% from the prior quarter as the gaming business takes a hit from fewer purchases by consumers of discretionary items such as laptops and video game consoles.
So far, at least, demand for the chips that run the servers in the cloud-computing sector don’t look to be sharing the worst of the downturn. At least, Advanced Micro Devices reported that its sales in that segment remained strong.
But it is getting harder and harder to believe that the damage is limited to only the PC sector. And right now traders and investors are in a sell ’em all and sort it out later mood. For example, NXP Semiconductors (NXPI) and Infineon (IFFNY), chip makers with much more exposure to the hot auto segment than go PCs, are down 4.96% and 5.03%, respectively, at the close today.
If I were bargain hunting in this Bear Market, which I’m not, I’d be looking for bargains among the companies that make chips for cars. And among chip equipment makers. I think those are stocks I’d like to hold in the long term but right now the Bear Market trend in technology is against them.
Buying and selling decisions are made very difficult just right now because tomorrow’s CPI inflation report for July has the potential to move stocks big–up or down depending on the news.
