Chip Stocks Nvidia, AMD And Others See More Selloff On Wednesday - What's Going On?

U.S. chip stocks led by Nvidia Corp NVDA, Advanced Micro Devices, Inc AMD, Taiwan Semiconductor Manufacturing Co TSM, Broadcom Inc AVGO, Qualcomm Inc QCOM, Arm Holdings Plc ARM, Intel Corp INTC, Micron Technology, Inc MU are trading lower on Wednesday.

Tesla Inc TSLA and Google parent Alphabet Inc’s GOOG GOOGL second-quarter earnings on Tuesday failed to impress the Street and are dragging the stocks lower.

Tesla, a key Nvidia customer, reported second-quarter revenue growth of 2% year-on-year to $25.5 billion, beating the consensus estimate of $24.7 billion. EPS of $0.52 lagged the consensus estimate of $0.62.

Tesla’s second-quarter deliveries declined by 5% to 443,956. The production decreased by 14% to 410,831.

The EV giant expects quarter-on-quarter increases in production in the third quarter. The stock is down 12% Wednesday.

Alphabet, another crucial Nvidia client, reported second-quarter revenue growth of 14% year-on-year to $84.7 billion, beating the analyst consensus of $84.2 billion. EPS of $1.89 beat the analyst consensus of $1.85.

Google Search revenue was $48.5 billion (up from $42.6 billion) under Google Advertising, which reached $64.6 billion (up from $58.1 billion). Google Cloud revenue was $10.3 billion (up from $8.0 billion). The stock is down 4% Wednesday.

The growing geopolitical tensions between the U.S. and China, triggered by the Western counterpart’s advanced semiconductor sanctions on the Asian counterpart and Presidential candidate Donald Trump’s comments, have already taken a toll on the semiconductor sector since last week. Also this week, key U.S. tech giants visited Beijing despite the semiconductor sanctions, highlighting the importance of China as a critical semiconductor market.

The VanEck Semiconductor ETF SMH and iShares Semiconductor ETF SOXX, which represent the broader semiconductor industry, are down over 2% on Wednesday.

Photo via Shutterstock