The U.S. stock market ended last week on a bearish note, with the Nasdaq Composite experiencing its sixth consecutive losing session on Friday, marking the longest losing streak in over a year. The tech-centric index declined by 2.05% to close at 15,282.01, while the broader S&P 500 also fell by 0.88% to finish at 4,967.23.
The market’s decline was partially driven by a retreat in semiconductor companies globally. Nvidia stock, for instance, lost 10% on Friday, retreating to its lowest levels since late February. The Philadelphia Semiconductor Index (SOX) in the U.S. hit a roughly two-month low on Thursday and continued to slide into Friday. Similar sentiments were observed in Asian markets, where chip-related stocks saw significant declines in Tokyo and Seoul.
The overall market sentiment was dampened by the decline in TSMC’s share price, despite the company exceeding market expectations with its January-March results, which were announced on Thursday. The geopolitical unrest in the Middle East and a worse-than-expected earnings report by ASML Holding, another major semiconductor player, further contributed to the negative sentiment.
Analysts from Citi noted that mixed results and a pause in increased AI forecasts, which had fueled the chip sector’s rally from January to last month, were likely contributing factors to the sell-off. However, they believe that some semiconductor stocks could face headwinds until June/July and view the current pullback as a buying opportunity for highly rated names.
Nvidia is set to release its earnings report next month, with investors closely monitoring updates on current demand trends for AI chips. Consensus estimates expect the company to report earnings per share (EPS) of $5.19 on revenue of $22.91 billion, compared to $1.09 and $7.19 billion in the same period last year.
Analysts from Fairlead highlight the recent penetration of Nvidia’s 50-day moving average (MA) and identify support levels at $742-$752. They also note short-term oversold conditions and advise considering reducing exposure to Nvidia into a rebound, with resistance now seen at $974.
