nvidia (NVDA) Major chip stocks fell on Tuesday amid a series of analyst rating cuts and repricing of the broader sector after the Biden administration moved last week to restrict technology exports to China.
Warning about near-term revenue growth from Advanced Micro Devices (AMD) in addition to weak demand for computers and smartphones, pressure on already-weak chip makers increased late last week, with President Joe Biden’s decision to severely limit sales of equipment to China-based companies used to make advanced semiconductors causing It provides more downside momentum.
Meanwhile, Reuters reported late Monday that KLA Corp. (KLAC) which makes chipmaking equipment to begin complying with Biden’s order this week, cutting sales of some of its products – including those made by Intel. (INTC) and SK Hynix – to its largest geographic market.
Overnight in Asia, the impact of Biden’s export restrictions was mirrored across tech stocks in the region, with Taiwan Semiconductor Mfg. Co. Ltd. (TSM) The world’s largest chip maker and major supplier to Apple Inc. (AAPL) iPhone, falling more than 8.3% in Taiwanese trade.
In the US, Intel also took a hit after analysts at Wells Fargo lowered their price target on the chip maker, citing a sharp drop in near-term sales amid broader weakness in the sector.
Meanwhile, Nvidia’s price target was cut by $38 on Citigroup to $210 a share, amid moderate growth rates in the sale of cloud computing chips.
However, shares of Marvell Technology MRVL rose after analysts at Wells Fargo boosted their rating on the 5G and cloud-focused chip maker, noting its isolation from overall trends hitting the broader semiconductor sector.
Wells Fargo analyst Gary Mobley raised his valuation to “overweight” from “equal weight”, keeping the $58 price target in place, noting that the group’s fundamentals will allow it to outperform its peers when the global economy finds “a sure ground”.
Nvidia shares were marked down 1.5% in pre-market trading to indicate an opening bell price of $114.90 per share. Intel shares were down 0.56% at $25.06 per share, while KLA shares were down 2.9% to $290.60 per share.
Marvell shares were marked 0.5% higher in premarket trading to indicate an opening bell price of $40.50 per share.