U.S. equities are dropping hard again on Tuesday, a continuation of ongoing weakness in the technology sector amid nasty looking pullbacks in one-time high-flyers such as Amazon (NASDAQ:AMZN) and Facebook (NASDAQ:FB). And the semiconductor stocks are in a tailspin.
And while it is true some of this is technical in nature — driven by a realization from many that tech stocks had come too far, too fast and valuations were now trying — there are real reasons to feat the decline is just getting started.
Look at the bloodbath underway in a number of semiconductor stocks related to real, on-the-ground evidence of trouble. This is can be traced not only to indications from Apple (NASDAQ:AAPL) that the smartphone super cycle is ending as well as inventory backlogs.
Here are five chipmaker stocks in the area to avoid:
Semiconductor Stocks: Nvidia (NVDA)
Click to Enlarge Nvidia (NASDAQ:NVDA) shares are dropping hard on Monday, down more than 9% to cap a total decline of nearly 50% from the high set in early October.
As they say, risk happens fast. Weaker-than-expected chip demand left the company with excess inventory and led to weak forward guidance.
Ongoing price declines for bitcoin — with cryptocurrency mining a key source of demand in recent years — is playing a large part in this.
The company will next report results on Feb. 7 after the close. Analysts are looking for earnings of $1.40 per share on revenues of $2.7 billion. When the company last reported on Nov. 15, earnings of $1.84 missed estimates by eight cents on a 20.7% rise In revenues.
Semiconductor Stocks: Monolithic Power Systems (MPWR)
Click to Enlarge Shares of Monolithic Power Systems (NASDAQ:MPWR) continue to bonk their head on overhead resistance near the 200-day moving average and remain down early 20% from the highs set in early September.
Shares recently suffered a price target downgrade from analysts at Cowen who noted that despite strong quarterly results there is softness in the Chinese market.
The company will next report results on Feb. 7 after the close. Analysts are looking for earnings of 99 cents per share on revenues of $154.03 million.
When the company last reported on Oct. 25, earnings of $1.06 beat estimates by a penny on a 24% rise in revenues.
Semiconductor Stocks: Altair (ALTR)
Click to Enlarge Shares of Altair (NASDAQ:ALTR) are down early 10% on Monday, extending its worst post-IPO pullback to return to levels not seen since May.
Already down more than 30% from its high, news the company is acquiring Datawatch (NASDAQ:DWCH) has failed to generate investor interest.
The company is a derivative play, making software and engineering solutions used by the semiconductor industry. Clients include names like Qualcomm (NASDAQ:QCOM)
The company will next report results on March 20 after the close. Analysts are looking for earnings of 10 cents per share on revenues of $98.4 million. When the company last reported on Nov. 8, earnings of 10 cents per share beat estimates by four cents on a 10.6% rise in revenues.
Semiconductor Stocks: AMD (AMD)
Click to Enlarge Advanced Micro Devices (NASDAQ:AMD) shares are down more than 40% from their September high to threaten another violation of its 200-day moving average, which was tested back in late October.
Despite positive reviews for its new CPU line, GPU demand overall is fading as the cryptocurrency mining fad fades away along with Bitcoin prices leaving bloated inventories and markdowns in its wake.
The company will next report results on Jan. 29 after the close. Analysts are looking for earnings of nine cents per share on revenues of $1.5 billion.
When the company last reported on Oct. 24, earnings of 13 cents per share beat estimates by a penny on a 4.4% rise in revenues.
Semiconductor Stocks: Qorvo (QRVO)
Click to Enlarge Shares of Qorvo (NASDAQ:QRVO) have been fading on ongoing fears over demand for Apple’s iPhone lineup after a lukewarm reception for the 2018 debuts.
Already down 25% from its August high, the stock is testing critical support from its 2017 summertime lows. Analysts are Craig Hallum recently lowered their price target and warns that Street earnings estimates are still overly optimistic.
The company will next report results on Jan. 30 after the close. Analysts are looking for earnings of $1.70 per share on revenues of $821.5 million.
When the company last reported on Oct. 31, earnings of $1.75 per share beat estimates by 13 cents on a 7.8% rise in revenues.
As of this writing, William Roth did not hold a position in any of the aforementioned securities.
