The entire chip sector has been under pressure recently. Micron is off by 27% from its highs. Intel is down by 18%. Broadcom especially has been hit pretty hard, down by more than 27% from its highs, Taiwan Semiconductors down by 10% and now comes Nvdia.
Nvdia report in itself was not bad but they disappointed on the forward guidance. They guided 3.25B and the street was looking for 3.34B. The first impression was that Crypto is to be blamed but Nvdia clarified on the call that they are not even considering any revenue from the Crypto miners in their estimate. So if the Cyrpto sector picks up then it should be a bonus to Nvdia, if not nothing to worry. Another thing that left me scratching my head was the upcoming Turing release should help but I think those numbers will reflect more in the fourth quarter. Apart from this, it was refreshing to see that the revenue from Data Center & Gaming was still going gangbusters. Lastly, the huge business from AI sector is still promising and so far Nvdia seems to have a great head start.
In the short term, we may see Nvdia join the “Chip Wreck” but in the long term, Nvdia should be a great buy. If the tech sector continues to weaken, then one can expect to scoop some Nvdia at around 225. Also, I would not mind dipping into the semiconductor ETF SMH below 100 as the Chips have cooled enough to make it interesting once again.