((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
(Update actions throughout the year) by Harshita Mary Varghese
Advanced Micro Devices and Super Micro Computer led a drop in chip stocks on Wednesday after their earnings disappointed investors who had invested in the sector due to their optimism about the artificial intelligence.
AMD AMD.O fell nearly 10% and was on track to lose more than $21 billion in market value.
Its forecast of $4 billion in AI chip sales for 2024 fell short of Wall Street investors’ high expectations after big rival Nvidia NVDA.O’s massive forecasts over the past year.
Super Micro Computer SMCI.O , whose stock’s 150% jump this year outpaced even Nvidia’s gains, fell more than 16% after its third-quarter revenue missed estimates on the back of questions regarding the profitability of a new line of servers.
The Philadelphia Semiconductor index .SOX fell 3.5%.
Nvidia fell 5.7%, while Micron Technology MU.O lost 2.9% and AI-related chip company Marvell Technology MRVL.O slipped 3.6%.
“As the market moves more and more toward de-risking over the past couple of days, it’s no surprise that unless these companies beat their earnings hands down, some of the hot air is coming out of them at the moment,” said Russell Hackmann, president of Hackmann Wealth Partners.
Executives from AMD and Super Micro Computer said supply constraints were hampering their efforts to capitalize on demand for equipment fueling the generative AI boom.
“Taking a step back, AMD has multiple customers all trying to increase the number of MI300 (AI) chips very quickly. This is straining the supply chain to some extent,” said analysts at TD Cowen .
“However, from a demand perspective, customer engagement is increasing, not only for the MI300X, but also for its successor products
Several analysts remained positive on AMD, saying easing supply chain constraints should allow the company to increase its share of the AI chip market and potentially rake in billions dollars of revenue.
At least 10 analysts lowered their price target on AMD, while eight raised their views, according to LSEG data. Super Micro underwent three price target increases and two reductions.
Shares of Apple suppliers AAPL.O Qualcomm QCOM.O and Qorvo QRVO.O fell 0.7% and 3.4%, respectively, ahead of their quarterly reports after the bell on Wednesday.
