Why Nvidia Stock Is Falling Today
What happened
Shares of Nvidia (NASDAQ: NVDA) were sliding today on no company-specific news. Instead, investors are likely processing comments about supply chain issues in the chip market that Intel's (NASDAQ: INTC) management mentioned on the company's conference call yesterday.
The tech stock was down by 1.9% as of 11:42 a.m. ET.
So what
Intel beat Wall Street's expectations for both the top- and bottom-line estimates in the first quarter, but the company's CEO, Pat Gelsinger, highlighted some persistent problems in the semiconductor space that Nvidia investors latched on to.
Image source: Getty Images.
First, Gelsinger said that "component supply constraints continue to be a challenge with the most recent COVID lockdowns in Shanghai further increasing supply chain risk and contributing to inflationary pressures that are having a negative impact" on the company's PC total addressable market.
China has implemented a strict zero-COVID policy that has resulted in cities being shut down when coronavirus cases pop up, which has slowed down some chip production for companies.
Adding to Nvidia investors' concerns is the fact that Gelsinger expects more pain ahead.
"The chip shortage cost the U.S. economy $240 billion last year and we expect the industry will continue to see challenges until at least 2024 in areas like foundry capacity and tool availability," he said on Intel's latestearnings call
Now what
Nvidia investors clearly weren't happy to see these comments about the chip market today, and they come as the tech company's share price has already tumbled 22% over the past six months.
Nvidia's shareholders will get a better picture of how the company is doing when Nvidia reports its first-quarter results on May 25. But with the semiconductor market currently experiencing supply chain issues and Nvidia's peers seeing ongoing issues in this space, Nvidia investors may want to prepare for some more share price swings ahead.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Nvidia. The Motley Fool recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy.
