Many semiconductor stocks are retreating this morning after a prominent name in the sector, Nvidia (NASDAQ:NVDA), preannounced weaker-than-expected second-quarter revenue yesterday. NVDA stock fell 7% on the news yesterday. A number of other chip makers have also reported disappointing earnings in recent weeks.
Also noteworthy today is a report that President Joe Biden intends to sign the CHIPS Act this morning. The legislation will provide a significant amount of government subsidies to semiconductor companies.
Nvidia Preannounces Disappointing Q2 Revenue
Yesterday, the chip maker reported its Q2 sales would come in at roughly $6.7 billion, well below the firm’s previous guidance of $8.1 billion. Last quarter, which ended on July 31, the company’s top line increased just 3% versus the same period a year earlier.
In Q2, Nvidia’s gaming revenue tumbled 33% year-over-year to $2.04 billion.
“Our gaming product sell-through projections declined significantly as the quarter progressed,” CEO Jensen Huang said.
According to Barron’s, the sharp decline of cryptocurrencies’ value, along with a looming change in how Ethereum (ETH-USD) is mined, may have contributed to the large decrease in the sales of Nvidia’s gaming graphics cards.
Other Chip Makers’ Results Miss Average Expectations
A maker of memory chips, Micron (NASDAQ:MU) disclosed earlier this morning that its top line for its current quarter would be at or below the low end of its guidance range, which is in around $6.8 billion. Micron also anticipates that, during the upcoming quarter, its margins and sales will fall meaningfully. The company blamed the weak outlook on “macroeconomic factors and supply chain constraints,” Seeking Alpha reported.
Additionally, Western Digital (NASDAQ:WDC) recently announced results that missed analysts’ average expectations and brought down semiconductor stocks. Finally, on July 28, Intel (NASDAQ:INTC) reported weaker-than-expected results, causing multiple analysts to downgrade INTC stock.
Biden to Sign CHIPS Bill
The CHIPS bill, which Biden is expected to sign at today, would give chip companies “$52.7 billion in subsidies for U.S. semiconductor production and research,” Reuters reported. The law is supposed to ease the chip shortage and enhance U.S. national security by spurring companies to produce more semiconductors in the U.S.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.