Chip stocks fall after weak Nvidia revenue forecast as broader market trades lower
By APFriday, May 14, 2010
Chip stocks fall after weak Nvidia sales forecast
NEW YORK — A broad market decline and a weak second-quarter revenue forecast from graphics chip maker Nvidia Corp. sank shares of some semiconductor stocks Friday afternoon.
Nvidia tumbled $1.89, or 13 percent, to $12.76. Intel Corp., the world’s biggest provider of microprocessors for personal computers, fell 81 cents, or 3.6 percent, to $21.69, while Advanced Micro Devices Inc. fell 72 cents, or 7.6 percent, to $8.70.
The Philadelphia Semiconductor index was down more about 4 percent in afternoon trading.
After the closing bell Thursday, Nvidia projected revenue for this quarter to come in about 3 percent to 5 percent below first-quarter levels, implying a forecast of $952 million to $972 million. On average, analysts polled by Thomson Reuters expected $991 million.
Despite the forecast, Kaufman Bros. analyst Suji De Silva said Nvidia is poised for a growth spurt over the next few quarters, with new chip products set to come out. He kept a “Buy” rating on the stock in a note to clients Friday.
On a similar note, Wedbush analyst Patrick Wang said, “We believe management to be conservative given expectations for new products.” He kept a “Neutral” rating.
In the broader market, stocks took a dive Friday on growing concerns about debt among European countries. The Dow Jones industrial average was down 1.5 percent in afternoon trading.
