Chip stocks underperformed the broader market Thursday after the semiconductor industry logged its 11th month in a row of steep losses from the year-ago period.
Global chip sales in May fell 21.1% to $40.7 billion, from April 2022’s $51.7 billion, according to the trade group Semiconductor Industry Association late Thursday.
“Despite continuing market sluggishness compared to 2022, month-to-month global semiconductor sales inched upward in May for the third consecutive month, sparking optimism for a possible market rebound during the second half of the year,” said John Neuffer, SIA’s chief executive, in a statement.
The PHLX Semiconductor Index
SOX,
declined 1.3% Thursday, while both the S&P 500 index
SPX,
and the tech-heavy Nasdaq Composite Index
COMP,
closed down 0.8%.
SIA expects chip sales to fall 10.3% in 2023, with a rebound of 11.9% growth in 2024, using World Semiconductor Trade Statistics forecast data.
Year to date, the SOX index is up 41.3%, compared with a 30.7% gain by the Nasdaq and a nearly 15% rise by the S&P 500.
Among the large caps, leading those chip gainers are shares of Nvidia Corp.
NVDA,
which have rallied 178% in 2023 on the promise of cashing in big on artificial intelligence models like Microsoft Corp.
MSFT,
-backed OpenAI’s ChatGPT.
Advanced Micro Devices Inc.
AMD,
shares have rallied 50.6% on the year; Marvell Technology Inc.
MRVL,
shares have gained 58.8%; Lam Research Corp.
LRCX,
is up 47.8% on the year; ON Semiconductor Corp.
ON,
has gained 48.5%; and Broadcom Inc.
AVGO,
has grown 51.7%.
Citi Research analyst Christopher Danley said sales growth and pricing are both rising, but he remains cautious on the sector, with memory-chip maker Micron Technology Inc.
MU,
his top pick.
“We remain cautious on the group and expect every analog company to lower outlook over the summer due to an inventory correction,” Danley said.
Micron reported earnings last week and called a bottom in the memory-chip market.
Read: Micron CEO calls bottom in memory-chip market, but weak PC, smartphone forecasts cut into expected AI gains
Evercore ISI analyst C.J. Muse, whose top picks include Nvidia, Marvell and Broadcom, said he is sticking to his forecast of $420 billion in industry sales for the year, excluding memory sales.
Intel Corp.
INTC,
shares are up 21% year to date, while Taiwan Semiconductor Manufacturing Co.’s ADRs
TSM,
are up 33.5%. Shares of Texas Instruments Inc.
TXN,
shares have only risen 5.8% on the year, while Qualcomm Inc.
QCOM,
shares are up only 4.8%.
PC maker Dell Technologies Inc.
DELL,
has seen shares rise 33.8% for the year, while HP Inc.
HPQ,
shares are up 15%.
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