When Micron (MU) reported spectacular earnings on March 29 but then fell, it signaled a bear phase for
semiconductor stocks. Bearishness is excessive. Analysts question the sector’s prospects, speculating
that the industry will swing to a chip surplus.
This prediction is flawed.
Taiwan Semi (TSM) and Micron both forecasted strong demand in the quarter ahead. Nvidia (NVDA)
launched an advertising campaign to recognize the graphics card shortage. It is promoting a greater
availability of GPUs. The increased supply will lower prices back to MSRP. Higher unit sales will lift
Nvidia’s revenue. Similarly, Advanced Micro Devices (AMD), which peaked at $164.46 last year, will
benefit from a higher supply.
AMD launched the 5800X 3D, which has more cache. This is the last CPU for the AM4 platform. In the
GPU space, it will release slightly improved cards before a major product revamp. Later this year, AMD
will have next-generation AM5 chips. Customers who need to upgrade will not wait for better
technology. They will buy what they need now.
Risk
Corporations that upgraded server and staff computers will slow computer purchasing. Markets are
expecting this downward trend. Corsair (CRSR) fell after pre-releasing weak sales. IDC reported that first-
quarter PC shipments fell. HP Inc. (HPQ) lost market share while Dell and Apple gained share. In this
case, lower sales would validate the bear market for chip stocks.
