Chip Stocks Drop Amid Uncertain Semiconductor Demand Outlook
Summary:
* Semiconductor stocks declined on Thursday following comments from an Nvidia supplier indicating uncertainty in demand this year.
* SK Hynix, a memory chip supplier to Nvidia, cited inventory adjustments from PC and smartphone OEMs, increased trade protectionism, and geopolitical risks as factors dampening demand.
Decliners:
* Nvidia (NVDA) sank up to 2%
* Arm (ARM) dropped nearly 6%
* Micron (MU) fell approximately 4%
* Advanced Micro Devices (AMD) and Broadcom (AVGO) declined around 1%
Positive News:
* The prior day, chip stocks rallied on news of a massive AI infrastructure project called Stargate.
Divergence in Market:
* Needham analysts note a divergence between semiconductors for consumer products and those for data center AI usage, with the latter experiencing strong demand.
Outlook for AI Segment:
* SK Hynix predicts continued demand for memory chips used in AI data centers, driven by investments from Big Tech companies.
* Needham warns that the divergence between non-AI and AI chip stocks may narrow as AI revenue growth decelerates in 2025.
Big Tech Spending:
* Google and Microsoft have indicated that their AI spending will begin to slow down in the coming quarters.