With semiconductor stocks falling again, some chip investors may think it’s time to hunt for bargains. That’s not a good idea.
While stock prices are lower, the main problem is that stocks are going down for good reasons. And recent developments suggest that business trends are getting worse – not better, meaning there could be more upside ahead.
On Friday, investors were worried about a potential global recession a day later FedEx (
) warning it will report weaker-than-expected earnings results. During early trading, shares of two major chip companies — Intel and
—End of new lows with both now down about 45% and 55% respectively this year.
It’s important to remember that if earnings prospects decline, the stock can become more expensive on a valuation basis even as the share price falls. And the latest batch of data points from chip companies isn’t ideal.
Two weeks ago,
) indicates potential revenue of $400 million for China in the current quarter may be affected by new export restrictions for its advanced AI data center chips.
A week later, a senior executive at
(code: 005930. Korea), the world’s largest manufacturer of memory chips, said weak chip demand from its customers may be more resilient than the company originally planned for next year.
Then, at this week’s tech conferences, executives at
) CEO Pat Gelsinger also said at a conference last week “things are pretty tough there” and business could be “a little bit worse” since they released guidance on the call second-quarter earnings at the end of July.
With another set of cautionary comments on processor, memory chip and graphics card prices continuing to be weak at retailers and used markets, it seems likely that demand for technology products is not. improved.
The coming clouds of the semiconductor industry appear to be getting darker and darker. Currently, there is no reversal in vision.
Write to Tae Kim at firstname.lastname@example.org