Why Nvidia Is Leading the May 2022 Semiconductor Sell-off

After mega-cap companies like Netflix (NFLX) and Meta Platforms (FB) lost a quarter of their value in a
day, hardware semiconductor stocks are the next potential under-performers. Nvidia once traded at over
$300. It closed at $167, losing almost half its value. Nvidia is a graphics chip giant. It is the bell weather
that could lead the sector lower.

Nvidia is the leading GPU supplier for PC makers. When prices of cryptocurrencies rose, demand for its
chips increased. Crypto miners needed Nvidia, Intel (INTC), and AMD (AMD) chips to create bitcoins.
The sharp drop in cryptocurrencies may hurt chip sales. In addition, Ethereum (ETH) will switch to a
mining process that does not need GPU-powered systems.

When Ethereum launches Eth2, it will embrace proof-of-stake. This will benefit the environment because
the crypto will not need high electricity for staking.

PC Market Weakens
PC demand weakened significantly in the first quarter. This is another headwind for Nvidia. Fortunately,
the supply of GPUs is improving. Prices are no longer triple the MSRP. At those prices in January,
demand weakened. Furthermore, Nvidia will release an RTX 4090. This will solidify its lead in the PC
gaming market.

NVDA stock may under-perform but its business will grow. GPU sales are about to strengthen.