AI Chip Stocks Rally Faces New Headwinds - Why Are Nvidia, Taiwan Semiconductor, Broadcom And Marvell Tech Stocks Sliding?

Semiconductor and chip stocks, including Nvidia Corp NVDA, Taiwan Semiconductor Manufacturing Co TSM, Broadcom Inc AVGO, Marvell Technology Inc MRVL, Lam Research Corp LRCX are trading lower Wednesday ahead of Nvidia’s fiscal second-quarter earnings, reflecting the interconnected semiconductor ecosystem.

The sell-off also follows key Nvidia partner Super Micro Computer, Inc SMCI getting called out by Hindenburg for its accounting malpractices, related party transactions, and more, leading to a delayed annual report filing. Super Micro stock is down close to 27%.

Nvidia’s second-quarter fiscal 2025 revenue guidance of $27.44 billion-$28.56 billion is a big jump from its second-quarter fiscal 2024 revenue of $13.51 billion, which bears testimony to the continued artificial intelligence tailwind for the stock. The stock is up over 172% in the last 12 months.

JPMorgan’s Harlan Sur expects Broadcom to be worthy of a $150 billion-plus AI semiconductor opportunity over the next five years after it bagged ChatGPT parent OpenAI and a major AI ASIC customer.

The analyst backed his projections with Broadcom’s plans to ramp Alphabet Inc GOOG GOOGL Google’s next-gen 3nm TPU AI processor and Meta Platforms Inc META being an essential partner of Broadcom. Broadcom stock is up 87% in the last 12 months.

Sur had earlier called out Broadcom’s 80% market share in the $5 billion-$7 billion datacenter/AI Ethernet switching and routing chipset market, which places it ahead of Nvidia and Marvell Technology.

Taiwan Semiconductor is a key Nvidia supplier and also leads the global foundry market with a 62% share as of the second quarter of 2024. It guided third-quarter revenue of $22.4 billion—$23.3 billion, up from the $17.3 billion reported a year ago, backed by robust demand for AI chied in hyper-performance computing and smartphones.

The contract chipmaker looks to boost prices of its 3-nanometer and 5-nanometer process products to maintain its margin goals. Taiwan Semiconductor stock is up over 80% in the last 12 months.

AI server company Super Micro is another beneficiary of the AI wave. It expects first-quarter revenue of $6 billion—$7 billion, compared to the $2.12 billion revenue it reported a year ago. The stock has increased over 61% in the last 12 months, backed by AI server demand from Big Tech giants.

Marvell Technology expects second-quarter revenue of $1.19 billion—$1.31 billion versus the $1.34 billion it reported a year ago, driven by ramping custom AI silicon for data centers, enterprise networking, and carrier infrastructure. The stock has risen over 24% in the last 12 months.

Lam Research expects first-quarter revenue of $3.75 billion—$4.35 billion, up from the $3.48 billion it reported a year ago. Thanks to the demand for AI-powered chips, the company is looking to tap the wafer fab equipment spending. The stock has risen over 20% in the last 12 months.

Price Actions: TSM stock is down 2.07% at $167.01 at the last check on Wednesday. AVGO is down 2.66% at $157.06, MRVL is down 2.55% at $67.94 and LRCX is down 2.49% at $801.29.

Image via Nvidia Blog