Chip stocks were among the worst performers on Tuesday, led by Nvidia stock (NASDAQ:NVDA), which was hit by a wave of analyst downgrades and a broader industry repricing in the wake of a decision by the Biden administration last week to restrict the sale of technology to China.
A warning on near-term revenue growth from Advanced Micro Devices (AMD), as well as weakening demand for PCs and smartphones, added pressure to already-weakened chipmakers late last week. In addition, President Joe Biden’s decision to severely limit the sale of equipment to China-based firms that are used in the production of advanced semiconductors provided further downward momentum.
In the meantime, Reuters reported late Monday that KLA Corp. (KLAC), a company that manufactures chipmaking equipment, will begin complying with the Biden order this week. This will result in the cessation of sales of some of KLA Corp.’s products, including those manufactured by Intel (INTC) and SK Hynix, to the geographic market that represents their largest share of the business.
Taiwan Semiconductor Mfg. Co. Ltd. (TSM), the world’s largest contract chipmaker and a lead supplier for Apple Inc. (AAPL) iPhones, fell more than 8.3% in Taiwan trading after the impact of the Biden export curbs reverberated throughout the region’s technology stocks overnight in Asia. Taiwan Semiconductor Mfg. Co. Ltd. (TSM) is the world’s largest contract chipmaker.
In the United States, Intel was impacted after market analysts at Wells Fargo reduced their price target on the chipmaker. The analysts cited a steep fall in near-term sales amid general weakness in the industry as the reason for their action.
What to expect with Nvidia Stock (NVDA)?
As a result of slower-than-expected growth rates in the market for cloud computing processors, Citigroup decreased its price target for Nvidia stock by $38 per share, bringing it down to $210 per share.
Marvell Technology MRVL shares, on the other hand, inched higher after analysts at Wells Fargo raised their rating on the chipmaker that is focused on 5G and the cloud. The analysts cited the chipmaker’s insulation from macro trends that are hitting the broader semiconductor sector as the reason for their decision.
Gary Mobley, an analyst at Wells Fargo, raised his rating for the company from ‘equal weight’ to ‘overweight’ while maintaining his price target of $58. He noted that the group’s fundamentals will allow it to outperform peers when the global economy “finds more sure footing.” However, he did not change his price target.
During the pre-market trading session, Nvidia share prices were marked 1.5% lower, indicating an opening bell price of $114.90 per share. Intel’s share price dropped by 0.56% to $25.06 per share, while KLA’s share price dropped by 2.9% to $290.60 a share.
During the pre-market trading session, Marvell’s share prices were marked 0.5% higher, which indicated an opening bell price of $40.50 per share.
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Author Valerie Remorosa 
