Nvidia’s (NVDA) stock experienced a sharp decline in pre-market trading on Friday, following the release of disappointing guidance from fellow chipmaker Broadcom (BRCM). While Broadcom surpassed earnings and revenue estimates for the third quarter, and even raised its 2024 artificial intelligence (AI) revenue forecast from $11 billion to $12 billion, the fourth-quarter revenue guidance of $14 billion fell short of analysts’ expectations. This led to a 9% drop in Broadcom’s stock price during pre-market trading.
The negative sentiment surrounding Broadcom’s performance could be spilling over to Nvidia, where investors’ high expectations for AI growth may have been fueled by recent hype. This situation highlights the inherent risk associated with growth stocks like semiconductor companies, which are often considered risky bets.
Adding to the downward pressure on the tech sector, a flight to safety ahead of the U.S. payrolls report could also be contributing to the decline. This report, which measures the health of the job market, is often seen as a crucial indicator for the economy and can trigger market volatility.
Nvidia’s pre-market decline of 1.89% to $105.18 reflects the broader market sentiment. Other semiconductor companies like Arm Holdings plc (ARM), Advanced Micro Devices (AMD), Super Micro Computer (SMCI), Marvell Technology (MRVL), QUALCOMM (QCOM), Texas Instruments (TXN), Taiwan Semiconductor Manufacturing (TSM), and the iShares Semiconductor ETF (SOXX) also experienced significant pre-market declines.
The recent market performance suggests that investors may be taking a more cautious approach to the tech sector, particularly in the wake of Broadcom’s tempered guidance and the upcoming jobs report. It remains to be seen whether this downward trend will persist or if the market will rebound in the coming days.
