From Nasdaq: 2024-05-02 11:00:00

The semiconductor sector saw a significant drop last month due to concerns about long-term demand and weak sales from AI companies like AMD and Super Micro Computer, resulting in a 3.5% decline in the Philadelphia Semiconductor Index. Consequently, other chipmakers like Nvidia, Micron, and Marvell also experienced losses as the sector lost $143 billion in market value.

AMD’s stock fell 9% after offering lower guidance for its newly released AI chip, despite raising revenue targets for another product. Analysts cut price targets on the stock, although some are optimistic about its growth prospects. Super Micro Computer also saw a 14% decline in its stock following a revenue miss, leading to concerns about profitability.

Skyworks stock plunged 15.3% due to weak revenue guidance, reflecting concerns about demand. As a result, semiconductor ETFs like SMH, SOXX, SOXQ, SHOC, and FTXL all decreased by around 3% each. Despite the recent slump, the semiconductor sector still outperforms the broader market due to the rapid growth of AI and increasing demand for semiconductor products across various industries.

Looking ahead, the AI market is projected to reach $811.75 billion by 2030, driving further growth in the semiconductor sector. With ETFs like SMH, SOXX, SOXQ, SHOC, and FTXL holding a top Zacks Rank, they are expected to outperform the market and offer diversification benefits. Investors may see the recent dip as a buying opportunity given the strong industry fundamentals and growth prospects.



Read more at Nasdaq: Should You Buy the Dip in Semiconductor Stocks With ETFs?