Investors lose faith in semiconductor industry amid rising tariffs, export controls in US

Solid earnings for semiconductor companies have not been enough to prevent their stocks from falling. For more than two years since the generative AI boom began, Wall Street has been steadily raising the bar for chipmakers. AMD, Marvell Technology, Nvidia and other stocks have seen significant losses in recent years.

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Analysts believe that investors are demanding so much because they have previously invested in companies that build the infrastructure and devices that underpin the AI ​​economy, sending their stocks to historically highs. But expectations from AI adoption have not yet been met, even though the massive “infusion” of funds into AI has been going on for the fourth calendar year. The new US administration’s tariff policy and controls on the export of microchips are further increasing investors’ concerns.

Marvell shares fell 20% yesterday, their steepest drop since 2001. “While Marvell reported modest growth and an increase, the guidance was definitely below buyer expectations,” analysts at Cantor wrote. The company’s shares have risen 83% in 2024, and investors won’t settle for less.

Nvidia suffered a similar fate in late February, with its shares falling 8.5% the day after the company reported better-than-expected profit and revenue.

AMD shares have fallen more than 6% in February, although the only worrying development for the company has been some missteps in its data center chip business.

Shares of optical technology provider Credo Technology plunged 14% on Wednesday and another 10% on Thursday despite strong revenue growth and upbeat guidance.

VanEck Semiconductor’s market valuation has fallen nearly 6% this week, extending last week’s 7% decline. That’s despite the company’s stock rising 72% in 2023 and 39% in 2024. It doesn’t help that VanEck Semiconductor’s key customers include Nvidia, TSMC, and Broadcom.

The only recent exception to the negative trend was Broadcom, whose shares lost 6% yesterday but rebounded 12% today on the back of better-than-expected financial results, including strong revenue from its infrastructure business and semiconductors.