AI Chip Stocks Rally Faces New Headwinds - Why Are Nvidia, Taiwan Semiconductor, Broadcom And Marvell Tech Stocks Sliding?

Anusuya Lahiri

August 28, 2024

Semiconductor and chip stocks, including Nvidia Corp (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Co (NYSE:TSM), Broadcom Inc (NASDAQ:AVGO), Marvell Technology Inc (NASDAQ:MRVL), Lam Research Corp (NASDAQ:LRCX) are trading lower Wednesday ahead of Nvidia’s fiscal second-quarter earnings, reflecting the interconnected semiconductor ecosystem.

The sell-off also follows key Nvidia partner Super Micro Computer, Inc (NASDAQ:SMCI) getting called out by Hindenburg for its accounting malpractices, related party transactions, and more, leading to a delayed annual report filing. Super Micro stock is down close to 27%.

Nvidia’s second-quarter fiscal 2025 revenue guidance of $27.44 billion-$28.56 billion is a big jump from its second-quarter fiscal 2024 revenue of $13.51 billion, which bears testimony to the continued artificial intelligence tailwind for the stock. The stock is up over 172% in the last 12 months.

JPMorgan’s Harlan Sur expects Broadcom to be worthy of a $150 billion-plus AI semiconductor opportunity over the next five years after it bagged ChatGPT parent OpenAI and a major AI ASIC customer.

The analyst backed his projections with Broadcom’s plans to ramp Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) Google’s next-gen 3nm TPU AI processor and Meta Platforms Inc (NASDAQ:META) being an essential partner of Broadcom. Broadcom stock is up 87% in the last 12 months.

Sur had earlier called out Broadcom’s 80% market share in the $5 billion-$7 billion datacenter/AI Ethernet switching and routing chipset market, which places it ahead of Nvidia and Marvell Technology.

Taiwan Semiconductor is a key Nvidia supplier and also leads the global foundry market with a 62% share as of the second quarter of 2024. It guided third-quarter revenue of $22.4 billion—$23.3 billion, up from the $17.3 billion reported a year ago, backed by robust demand for AI chied in hyper-performance computing and smartphones.

The contract chipmaker looks to boost prices of its 3-nanometer and 5-nanometer process products to maintain its margin goals. Taiwan Semiconductor stock is up over 80% in the last 12 months.

AI server company Super Micro is another beneficiary of the AI wave. It expects first-quarter revenue of $6 billion—$7 billion, compared to the $2.12 billion revenue it reported a year ago. The stock has increased over 61% in the last 12 months, backed by AI server demand from Big Tech giants.

Marvell Technology expects second-quarter revenue of $1.19 billion—$1.31 billion versus the $1.34 billion it reported a year ago, driven by ramping custom AI silicon for data centers, enterprise networking, and carrier infrastructure. The stock has risen over 24% in the last 12 months.

Lam Research expects first-quarter revenue of $3.75 billion—$4.35 billion, up from the $3.48 billion it reported a year ago. Thanks to the demand for AI-powered chips, the company is looking to tap the wafer fab equipment spending. The stock has risen over 20% in the last 12 months.

Price Actions: TSM stock is down 2.07% at $167.01 at the last check on Wednesday. AVGO is down 2.66% at $157.06, MRVL is down 2.55% at $67.94 and LRCX is down 2.49% at $801.29.

Image via Nvidia Blog

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