{"id":13393,"date":"2023-05-24T23:09:30","date_gmt":"2023-05-25T03:09:30","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/analog-results-tanked-stocks-in-auto-sector-nvidia-escaped\/"},"modified":"2023-05-24T23:09:31","modified_gmt":"2023-05-25T03:09:31","slug":"analog-results-tanked-stocks-in-auto-sector-nvidia-escaped","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=13393","title":{"rendered":"Analog Results Tanked Stocks in Auto Sector. Nvidia Escaped."},"content":{"rendered":"
\n
<\/p>\n
<\/p>\n<\/figure><\/div>\n

Semiconductor maker
\n Analog Devices
\n delivered a quarterly sales record on Tuesday. The stock tanked anyway. Management comments about the car business did it. Sales in that end market are expected to dip in the current quarter.<\/p>\n

That revelation tanked shares of a host of other car-related stocks across the globe. <\/p>\n

\n

\u201cWe delivered another very strong quarter, record revenue of $3.26 billion exceeded the midpoint of guidance and represented [Analog\u2019s] 13th consecutive quarter of sequential growth,\u201d said CFO Prashanth Mahendra-Rajah on the company\u2019s earnings conference call. \u201cOn a year-over-year basis, we grew 10%, led once again by all-time highs in industrial and automotive.\u201d Car-related sales represented 24% of Analog\u2019s sales. <\/p>\n

It didn\u2019t matter though. Analog (ticker: ADI) shares dropped 7.8% Wednesday, closing at $173.20, while the
\n S&P 500
\n and
\n Nasdaq Composite
\n fell 0.7% and 0.6%, respectively. <\/p>\n

Guidance did it. Sales in the current quarter are expected to be about $3.1 billion. Wall Street was looking for a little more. And sales into industrial and automotive end markets should be down about 3% to 6% sequentially, shaving about $100 million off of total revenue. <\/p>\n

\u201cChina definitely was the sort of the piece of new information that has developed over the more recent period,\u201d added Mahendra-Rajah. \u201cWe\u2019ve had three quarters of decline in China, and we\u2019re expecting a fourth.\u201d <\/p>\n

Car-related weakness in China isn\u2019t what investors want to hear. The statement might have been part of the reason
\n Tesla
\n (TSLA) dipped 1.5% and
\n NIO
\n (
\n NIO
\n ) shares dropped 9.6%. Weak quarterly sales from Chinese EV maker
\n XPeng
\n (XPEV), reported Wednesday, didn\u2019t help either.
\n XPeng
\n stock dropped 5.1%. <\/p>\n

For the Analog quarter, \u201cautomotive [business] was impacted by a slower ramp-up in Chinese EVs,\u201d wrote Susquehanna analyst Christopher Rolland in a Wednesday report. \u201cWe view these comments as signifying the long-awaited downtick for auto\/industrial\u2026.the correction here has begun.\u201d He still rates shares a Buy. His price target went down to $215 from $225 a share. <\/p>\n

New cars are requiring more and more chips. And EVs require more chips than conventional cars. Both trends have been a tailwind for chip makers. A looming \u201ccorrection\u201d could take some additional air out of semiconductor stocks in coming weeks. <\/p>\n

The news isn\u2019t equally bad for all the chip players. \u201cBad for those [chip makers] exposed to autos, those exposed to AI don\u2019t care,\u201d says New Street Research analyst Pierre Ferragu. \u201cUsually not the same players.\u201d <\/p>\n

\n Nvidia
\n (NVDA) is one that has both AI exposure and auto exposure, but auto exposure is relatively small, although it is growing. \u201c
\n Nvidia
\n \u2018s data center GPU products continue to garner strong demand from both AI-focused and broader data center demand,\u201d wrote Stifel analyst Ruben Roy in a Monday research report.<\/p>\n

Nvidia\u2019s data center and so-called \u201cprofessional visualization\u201d sales totaled $16.5 billion in 2022, or about 61% of total revenue. Those categories grew about 30% year over year. Auto-related sales in 2022 came in at $903 million, or about 3% of total sales. A small fraction, but auto-related sales were up about 60% year over year. <\/p>\n

Investors, Wednesday, acted as if they realize this. Nvidia stock dropped 0.5% Wednesday. Shares of chip companies with larger auto franchises took it on the chin. <\/p>\n

Shares of
\n ON Semiconductor
\n (ON),
\n NXP Semiconductors
\n (NXPI),
\n Infineon Technologies
\n (IFX.Germay) and
\n STMicroelectronics
\n (STM) fell 3.3%, 4.9%, 4.9% and 4.9%. Auto-related sales represent roughly 43% of 2022 sales for the quartet. <\/p>\n

Investors in traditional auto stocks didn\u2019t like what Analog had to say either. Shares of parts giant
\n Magna International
\n (MGA) dropped 3%.
\n General Motors
\n (GM) and
\n Ford Motor
\n (F) shares fell 3.4% and 3.3%, respectively. <\/p>\n

Few companies heavily involved in the auto business escaped Wednesday unscathed. <\/p>\n

Write to Al Root at allen.root@dowjones.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Semiconductor maker Analog Devices delivered a quarterly sales record on Tuesday. The stock tanked anyway. Management comments about the car business did it. Sales in that end market are expected to dip in the current quarter. That revelation tanked shares of a host of other car-related stocks across the globe. \u201cWe delivered another very strong […]<\/p>\n","protected":false},"author":1,"featured_media":13394,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-13393","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nAnalog Results Tanked Stocks in Auto Sector. Nvidia Escaped. | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Semiconductor maker Analog Devices delivered a quarterly sales record on Tuesday. The stock tanked anyway. 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