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MarketPulse: Traders Turn Negative on Nvidia as Semis Sag

Published 11/16/2018, 01:19 PM
Updated 11/16/2018, 01:30 PM
© Reuters.
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Investing.com - Nvidia fell sharply Friday, wreaking havoc in the broader semiconductors sector, after the chipmaker's third-quarter results and guidance for the current quarter fell short of estimates.

Nvidia tumbled 18% after missing third-quarter estimates and guiding fourth-quarter sales well below expectations for the second quarter in row as it struggled to sell excess supplies of GPUs following a slowdown in cryptocurrency activity.

The chipmaker guided fourth-quarter revenue to a range of $2.65 billion to $2.75 billion, well below analysts' expectations for $3.4 billion, according to S&P Capital IQ Consensus.

Analysts delivered a downbeat outlook on the Nvidia shares, which they expect to remain under pressure until the company releases its next report in February.

"Nvidia is a momentum stock that missed fiscal fourth-quarter consensus revenue by over 20%. This coupled with modest datacenter growth will likely keep the stock under pressure until the next report (February)," Nomura said.

Nvidia said its competitors were also feeling the pressure of surplus inventories, prompting investors to bail on its rival Advanced Micro Devices (NASDAQ:AMD), which fell 6%.

Semiconductor equipment maker Applied Materials (NASDAQ:AMAT) overcame some of the selling, rising 2% despite reporting subdued guidance and quarterly results that met expectations.

AMAT expects fiscal first-quarter earnings per share in the range of $0.75 to $0.83 on revenue of $3.56 billion to $3.86 billion, below consensus of $0.92 a share and $3.96 billion.

The overall Philadelphia Semiconductor Index fell 2%, as a recent string of underwhelming outlooks for the next quarter from some semis in the space kept investors on the sidelines.

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