Nvidia (NVDA) stock fell Wednesday after rival AI chipmaker Advanced Micro Devices (AMD) disappointed investors with its tepid guidance. Semiconductor stocks overall took a bath following quarterly reports from AMD and Skyworks Solutions (SWKS).
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Late Tuesday, AMD matched Wall Street's earnings target for the first quarter but sales were a tad light. Its sales outlook for the current quarter was roughly in line with estimates, but Wall Street was looking for a bigger boost from the company's MI300 AI accelerator business.
AMD raised its 2024 revenue target for MI300 to "at least $4 billion," up from $3.5 billion. But many on Wall Street were looking for new guidance of $4.5 billion to $5 billion for the product. Some optimistic forecasts were targeting a goal of over $6 billion in MI300 sales this year.
At least 12 Wall Street analysts cut their price targets on AMD stock after the company's Q1 report.
AMD Stock Falls, Pulls Nvidia Stock Down
On the stock market today, AMD stock tumbled 8.9% to close at 144.27. Nvidia stock slid 3.9% to 830.41.
Evercore ISI analyst Mark Lipacis said concerns about MI300 sales are "overdone."
"Our investment thesis is that the AI chip market will grow to an $80 billion market over the next five years and that AMD will capture up to 20% of that market — and we did not hear anything on the (AMD) call that moves us away from that thesis," Lipacis said in a client note. Nvidia is likely to continue to lead the AI chip market, analysts say.
Semiconductor Stocks Retreat
Elsewhere among semiconductor stocks, wireless-chip maker Skyworks delivered a modest beat for the March quarter, but guided well below views for the June quarter. Skyworks is heavily exposed to the declining smartphone market.
Skyworks stock plummeted 15.3% to close at 90.30 on Wednesday.
Meanwhile, the Philadelphia semiconductor index, known as SOX, fell 3.5%. The SOX includes the 30 largest semiconductor stocks traded in the U.S.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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