Nvidia (NVDA) Stock Falls Amid Disappointing AMD Guidance
Review of AMD’s quarterly performance and guidance
AMD’s Q1 Performance:
- AMD matched Wall Street’s earnings target for the first quarter.
- Sales fell slightly short of expectations.
- The sales outlook for the current quarter was in line with estimates.
- Reaction to MI300 Sales Outlook
- AMD raised its 2024 revenue target for the MI300 to “at least $4 billion.”
- Wall Street expected higher guidance, seeking $4.5 billion to $5 billion for MI300.
- Some optimistic forecasts aim for more than $6 billion in MI300 sales this year.
Answers from analysts:
- At least 12 Wall Street analysts cut their price targets on AMD stock after the Q1 report.
- Evercore ISI analyst Mark Lipsis played down concerns about MI300 sales, stressing long-term growth potential.
Stock performance
1) AMD stock
AMD stock fell 8.9% to close at 144.27.
2) Nvidia stock
Nvidia stock fell 3.9% to 830.41.
Market Outlook and Analyst Perspectives:
Analysts are optimistic about Nvidia’s dominant position in the AI chip market.
Despite short-term concerns, the long-term prospects for AI chip market growth are strong.
Performance of the semiconductor industry
2) Skyworks Solutions (SWKS)
- Skyworks reported a modest loss for the March quarter.
- Guidance for the June quarter fell well short of expectations.
- Skyworks stock fell sharply, falling 15.3 percent to close at 90.30.
- Philadelphia Semiconductor Index (SOX)
The SOX, comprised of the 30 largest semiconductor stocks in the U.S., retreated 3.5 percent.
Table of Contents
How did the decline in AMD stock affect Nvidia?
The decline in AMD stock had a ripple effect on Nvidia, causing its stock to slide as well. Both companies are significant players in the semiconductor industry, and market sentiment toward one often affects the other.
What was the overall performance of semiconductor stocks?
Apart from Nvidia and AMD, semiconductor stocks as a whole experienced a downturn. Skyworks Solutions, a wireless-chip maker, reported disappointing guidance for the June quarter, contributing to the broader retreat in the semiconductor industry.
What is the outlook for the semiconductor industry?
While short-term concerns exist, analysts remain optimistic about the long-term prospects of the semiconductor industry, particularly in areas like AI chips. Despite recent setbacks, the industry is expected to continue its growth trajectory over the coming years.
What was AMD’s performance in the first quarter?
AMD matched Wall Street’s earnings target for the first quarter, but its sales were slightly below expectations. The company’s performance was largely in line with forecasts, but investors were hoping for stronger guidance.
What is the significance of AMD’s MI300 AI accelerator business?
AMD has projected ambitious revenue targets for its MI300 AI accelerator business, aiming for at least $4 billion by 2024. However, some analysts anticipated higher guidance for this segment, leading to investor disappointment when the forecast fell short.
How did analysts react to AMD’s quarterly report?
Following AMD’s Q1 report, at least 12 Wall Street analysts lowered their price targets on AMD stock. However, some analysts, like Mark Lipacis of Evercore ISI, believe that concerns about MI300 sales are overblown, emphasizing the long-term growth potential of the AI chip market.
What caused the decline in Nvidia and AMD stocks?
The decline in Nvidia and AMD stocks followed disappointing guidance from AMD regarding its MI300 AI accelerator business. Additionally, concerns about the semiconductor market as a whole contributed to the downturn.
