On Wednesday, Nvidia (NVDA) stock fell after rival AI chipmaker Advanced Micro Devices (AMD) disappointed investors with its halfhearted guidance. After quarterly AMD and Skyworks Solutions (SWKS) reports, semiconductor stocks took a bath overall.
AMD met Wall Street's first-quarter profits target late Tuesday, although sales were slightly below expectations. The company's revenue forecast for the current quarter aligned with projections, although Wall Street had expected a bigger boost from its MI300 AI accelerator business.
AMD increased its revenue goal for the MI300 in 2024 from $3.5 billion to "at least $4 billion." However, Wall Street was hoping for fresh estimates for the product, estimated to be worth between $4.5 billion and $5 billion.
Some optimistic forecasts were targeting a goal of over $6 billion in MI300 sales this year.
Following AMD's Q1 release, at least 12 Wall Street analysts lowered their price targets for the company's shares. AMD's shares fell 8.9% on the stock market today, closing at 144.27. The stock of Nvidia fell 3.9% to 830.41.
Evercore ISI analyst Mark Lipacis said that concerns about MI300 sales are "overdone."
In a client note, Lipacis said that their 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. He noted they did not hear anything on the (AMD) call that moved them away from that thesis.
Amidst semiconductor stocks, Skyworks, a manufacturer of wireless chips, posted a modest beat for the March quarter but gave significantly lower guidance for the June quarter. Skyworks is heavily exposed to the declining smartphone market.
Skyworks' stock fell 15.3% on Wednesday, closing at 90.30.
Meanwhile, there was a 3.5% decline in the Philadelphia Semiconductor Index, or SOX. The top 30 semiconductor stocks traded in the US are included in the SOX.
