The Nasdaq saw its biggest loss since February on Wednesday. The PHLX Semiconductor Index (Nasdaq: SOX) fell 4.13% in a single day. It’s now down 17% from where it closed in July.

While the Nasdaq entered a correction on Wednesday, the semiconductor space is on the edge of a bear market. Why the drop? First of all, technology-adjacent stocks were selling off in general on Wednesday. Second, Texas Instruments (Nasdaq: TXN) issued a fourth-quarter outlook that predicted weakening demand in the quarter ahead.

Let’s take a quick look at five semiconductor stocks that saw the biggest fall’s among Wednesday’s sell-off.

5. Ambarella (AMBA)

• Down: 4.70%

2023 has not been kind to Ambarella (NASDAQ: AMBA). The company’s stock is down 45% since the end of July and overall is down 42% year-to-date. Ambarella issued guidance in late August that now looks eerily similar to Texas Instruments. The company reported “weak end-market demand” in the coming quarter and saw its shares immediately fall 20% the next day. They haven’t stopped falling since.

After recording sales of $337 million in fiscal 2023, Wall Street analysts now expect the company to record just $225 million in sales this fiscal year, a decrease of 33%. Even worse, the company isn’t expected to return to fiscal 2023 sales levels until 2026.

4. GLOBALFOUNDRIES (GFS)

• Down: 5.15%

GLOBALFOUNDRIES (NASDAQ: GFS) makes semiconductors for companies of all kinds, so it’s a good indicator of industry demand. At the end of March, the company’s shares had raced forward 40%. However, shares are now flat year-to-date.

After recording $8.1 billion in sales in 2022, the company is expected to deliver $7.4 billion in 2023. That’s a reduction of about 8%. Analysts believe that the company can surpass 2022’s sales levels in 2024, but those estimates could soon come down in the wake of Texas Instruments’ earnings report.

3. Universal Display (OLED)

• Down: 6.07%

Universal Display (Nasdaq: OLED) has joined the masses of semiconductor companies that are projected to have negative sales growth in 2023. The company saw 12% sales growth in 2022, but Wall Street now projects this year’s sales will drop 5%.

The good news? Wall Street still expects 2024 sales to grow 19%, which is a very healthy rate. However, with Universal Display trading at 33X earnings, a drop in expectations could lead to more pain ahead for shareholders.

2. Microchip Technology (MCHP)

• Down: 6.12%

Microchip Technology (Nasdaq: MCHP) is a company that’s going to struggle if a bellwether like Texas Instruments gives disappointing guidance. The company designs a diversified lineup of microcontrollers, microprocessors, DSPs, and memory products that sell to similar end markets.

So, it’s not surprising the company saw a 6.1% decline today. Unlike other entries we’ve already covered on this list, Microchip is still expected to see revenue growth in fiscal 2024. However, Wall Street expects conditions to remain choppy with 2025 experiencing flat revenues before a return to growth in fiscal 2026.

1. Impinj (PI)

• Down: 6.39%

We end our list on a happy note that proves Wednesday’s decline doesn’t mean doom for all semiconductor stocks. Impinj (Nasdaq:PI) fell 6.39% in today’s trading, but then released earnings after the bell.

The good news if you own Impinj stock: it’s up an incredible 17% in after-hours trading. The reason for this result is pretty simple, Impinj beat earnings expectations in an earnings release after today’s brutal market closed.

It wasn’t a huge beat, with revenue last quarter at $65 million (versus analyst expectations of $64.75) and a midpoint projection of next quarter’s earnings at $67 million versus Wall Street expectations of about $66 million.

However, in a market that’s lowering expectations for almost every semiconductor stock, even a slight beat should be enough to send shares northward.

 

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