Investors exposed to artificial intelligence suppliers should not ignore the pause in Nvidia’s (NVDA) uptrend. Shares peaked at around $150 and closed at $128.91. The leader of AI GPU chips has room to fall on valuation concerns. Its market capitalization will depend almost entirely on near-term sentiment.
In January, the annual Computer Electronics Show may lift Advanced Micro Devices (AMD), Qualcomm (QCOM), Intel (INTC), and Nvidia. Gamers expect Nvidia to announce the RTX 5000 series graphics card. AMD will likely introduce the 8000 series RX GPUs.
Micron Technology (MU) posted quarterly results after markets closed on Wednesday. Shares plunged by nearly 12% after the firm issued a weak forecast for its second quarter.
The memory supplier expects adjusted earnings per share of $1.33 to $1.53. Analysts expected nearly $2.00. Sales as low as $7.7 billion is below the $8.99 billion estimate.
Micron’s outlook is traditionally a forecast for the semiconductor industry as a whole. When demand for servers grows, customers need Micron’s chips. Unfortunately, Micron is ramping up its capital expenditure while the business cycle is ending. This would squeeze profit margins.
Your Takeaway
The AI sector will companies that thrive so long as they deliver on efficiency and automation. Other firms that only spend on AI machine learning but derive no revenue will fail.
