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With NVIDIA’s shares reeling from the vagaries of geopolitics and AMD’s hammered by softer demand, the global semiconductor sphere has struggled to perform lately. While the ongoing headwinds have been strong enough to outgun the secular AI-related tailwinds, there are signs that the prevailing paradigm is ripe for a somersault.
$NVDA *Said to have $5.0B in China orders in limbo after the latest US chip curbs; Reportedly halted plans for rush deliveries of China orders – US financial press (NVIDIA Corporation)
(More at https://t.co/QVs99NA3C1)— TradeTheNews.com (@Trade_The_News) October 31, 2023
Back in August, we highlighted a critical resistance trendline for NVIDIA shares, one that had come into play only two times previously, with the first interaction resulting in subsequent losses of around 57 percent while the second one spurring a much deeper loss of around 69 percent. Since then, NVIDIA shares are down 10 percent, with another bout of selling emerging toward the latter part of October, when the US administration restricted the GPU maker from selling China-exclusive H800 and A800 chips to the Asian giant, relegating around $5 billion worth of orders to a state of limbo.
CEO @LisaSu said $AMD expects data-center GPU products to generate about $400M of revenue in the fourth quarter and “surpass $2B” in 2024, helping shares recover after a quarterly outlook missed expectations. $AMD was down 1.9% in premarket trading
— notreload (@thudderwicks) November 1, 2023
For AMD, investors were less than enthusiastic about the company’s latest guidance for the fourth quarter of 2023, one that would see the company earn $6.1 billion in quarterly revenue vs. consensus expectations of $6.4 billion. Nonetheless, the stock has been able to rally after an initial bout of weakness as investors focus on AMD’s exposure to data center and AI-related tailwinds, where the semiconductor player expects to generate dedicated revenues of over $2 billion next year.
UBS: “Turning tactically positive on global semis .. now poised to rebound and outperform broader growth benchmarks .. in the short term as their stronger near-term recovery becomes more apparent.” $SMH $SOX pic.twitter.com/JvbpZxyipc
— Carl Quintanilla (@carlquintanilla) November 1, 2023
This brings us to the crux of the matter. UBS has now turned “tactically bullish” on global semiconductor stocks as their “near-term recovery becomes more apparent.”
Let’s see if semi’s can hold it together
Find out next time on the next episode of…
“The stock market hates you” pic.twitter.com/8WfZwhKOTx
— AJ Invests (@aj_invests) October 31, 2023
Interestingly, this upgrade comes just as Vaneck’s semiconductor-focused ETF touched the bottom of a medium-term channel, indicating healthy prospects of a rebound which should bode well for the shares of NVIDIA and AMD.
Nasdaq could test the lows again if this rising wedge breaks down this week
/NQ 4Hr pic.twitter.com/EcoXLwYD2s
— AJ Invests (@aj_invests) October 31, 2023
Of course, as the broader market continues to contend with the US Federal Reserve’s hawkish stance designed to smother inflationary impulses, the medium-term outlook for the semiconductor sphere is still mired in uncertainty.