Semiconductor Stocks Pressured Following Nvidia's Q2 Preannouncement

NVIDIA Corporation NVDA shares traded lower by 7.9% on Monday after the semiconductor giant preannounced just $6.7 billion in revenue for the July quarter, well below the $8.1 billion in revenue analysts were expecting. Several leading semiconductor stocks traded lower in sympathy for Nvidia as investors anticipate a potentially weak quarter in the semi industry.

"The shortfall relative to the May revenue outlook of $8.10 billion was primarily attributable to lower sell-in of Gaming products reflecting a reduction in channel partner sales likely due to macroeconomic headwinds," Nvidia said.

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Shares of Advanced Micro Devices, Inc. AMD traded lower by 2.1% on Monday, while Marvell Technology Inc MRVL shares dropped 2.3%. Taiwan Semiconductor Mfg. Co. Ltd. TSM shares were down 2.0%.

Intel Corporation INTC shares held up relatively well, closing flat on the day.

Difficult Semi Market: Nvidia said ongoing supply chain disruptions are weighing on sales in the near-term, but the company's long-term growth and profitability outlooks remain intact.

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A broad rotation out of high-growth tech stocks coupled with supply shortages has sent the iShares Semiconductor ETF SOXX down 26% year-to-date. Nvidia is now down 42% in 2022 despite reporting impressive 46.4% revenue growth in the first quarter. Nvidia is scheduled to report second-quarter earnings on Aug. 24.

Benzinga's Take: Expectations are extremely low for Nividia heading into its August report, creating the chance for a potential relief rally in the stock following the report. Even after Monday's sell-off, Nvidia shares are trading more than 30 times forward earnings and 16.2 times sales, suggesting the stock isn't exactly a value play at this point, especially if the company guides for further sales growth weakness in the second half of the year.