Nvidia Stock Hits Low Amid Semiconductor Sector Struggles

Shares of Nvidia have experienced a notable decline, dropping to a three-week low at the start of the month, largely due to pressures within the semiconductor sector that followed a recent earnings report from Nvidia. The state of the semiconductor market is under scrutiny, with significant attention on Broadcom's forthcoming earnings announcement scheduled for Thursday after market close. Stacy Rasgon, a senior analyst at Bernstein, emphasizes Broadcom's strong positioning in AI chip development, indicating that they are particularly aligned with hyperscalers like Google and Meta as they venture into proprietary chip designs. The analyst articulates that Broadcom's conservative forecasts, anticipating $11 billion in revenue for the fiscal year, may bode well for potential upside. Despite challenges in Broadcom's core business, particularly within AI networking, Rasgon believes that strong AI sales will compensate for slower segments. Additionally, he highlights Broadcom's acquisition of VMware, predicting a contributor of $4 billion in quarterly revenue as the software business gains traction. Meanwhile, the semiconductor industry faces an asynchronous recovery, whereby different sectors experience varied growth rates, complicating overall market trends. Nvidia's recent performance reveals concerns mainly surrounding its diminishing gross margins despite posting solid revenue figures. Looking ahead, the launch of Nvidia's new product, Blackwell, is seen as a catalyst for potential growth and stock recovery in the upcoming quarters. Rasgon stresses that while they may face competition, Nvidia's established ecosystem and architecture—particularly through CUDA—remain vital strengths in maintaining its market position.