Chip Stocks Slide As Nvidia Weighs On Sector

Chipmakers dragged stocks lower after Nvidia's results failed to reassure investors about the artificial-intelligence outlook.

On Wednesday, Nvidia reported fourth-quarter revenue of $68.13 billion, up 73% year-over-year and above the Street estimate of $66.0 billion.

The data center segment generated a record $62.3 billion in revenue, rising 75% Y/Y. Gaming and AI PC revenue reached $3.7 billion, up 47% Y/Y.

Looking ahead, Nvidia expects first-quarter revenue between $76.44 billion and $79.56 billion, above the Street estimate of $71.96 billion.

Nvidia said it has secured inventory and capacity to meet demand for the next several quarters, though supply constraints could weigh on the gaming segment in the first quarter and beyond.

Nvidia fell 5.5% despite issuing a bullish forecast, weighing on nearly every stock in a major semiconductor index.

Earnings Across Tech Draw Mixed Reaction

Hardika Singh of Fundstrat Global Advisors told Bloomberg Nvidia's strong revenue, net income and guidance did not spark a frenzy because the company rarely misses those benchmarks.

AI Profitability Concerns Create Headwinds

Matt Maley of Miller Tabak said Nvidia delivered solid earnings and guidance, but investors still question whether the company can sustain its elevated gross margins.

Matt Maley of Miller Tabak told Bloomberg that he sees several potential headwinds, including doubts about AI profitability.

He warned that these factors could make the month difficult for stocks.

Meanwhile, oil prices rose after Iran described its nuclear talks with the U.S. as intense, prompting investors to seek safety in bonds.

Price Action: Nvidia shares were down 1.80% at $181.56, Broadcom shares were down 0.95% at $318.63, Advanced Micro Devices shares were down 1.40% at $200.83 and Micron Technology shares were down 0.13% at $415.02 at the time of publication on Friday, according to Benzinga Pro data.

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