Major U.S. stock indexes ended lower last week, suffering a sixth straight session of losses on Friday, their longest streak in more than a year. The technology-heavy Nasdaq fell 2.05% to close at 15,282.01, while the broader index was also lower, falling 0.88% to close at 4,967.23.
The decline was driven in part by declines in semiconductor stocks around the world, including Nvidia (NASDAQ:), which retreated from recent highs as investors booked profits after relentless gains.
Nvidia and chipmakers collapse amid macroeconomic concerns
Amid the latest sell-off, Nvidia shares fell 10% on Friday, hitting their lowest level since late February.
In the US, the Philadelphia Semiconductor Index (SOX) hit a roughly two-month low on Thursday and continued to decline through Friday. The sentiment was reflected in Asian markets, with chipmaker shares falling sharply in Tokyo and Seoul.
Overall market sentiment was dampened by a fall in TSMC’s share price, despite the company beating market expectations with its January-March results announced on Thursday.
In addition, geopolitical unrest in the Middle East, as well as a worse-than-expected earnings report from ASML Holding (NASDAQ:)(AS:) Holdings, a major player in the semiconductor market, weighed on market sentiment.
“Why are semi-finished products being sold out? While all this was likely in the preview, we believe some semi-stocks are likely to struggle given the mixed results and pause in elevated AI forecasts that drove the group from January to last month,” Citi analysts said in a recent note.
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“We continue to believe that some semis will face headwinds until June/July when it may become clear that valuations will rise again and we believe this is a buy opportunity for our shares with a buy rating,” they added.
Key Nvidia Stock Levels to Watch
Nvidia is expected to report its latest earnings report next month, with investors eagerly awaiting updates on current demand trends for artificial intelligence chips following several blockbuster releases.
Based on current consensus estimates, the chipmaker is expected to report earnings per share (EPS) of $5.19 on revenue of $22.91 billion, compared with $1.09 billion and $7.19 billion in the same period last year.
Meanwhile, the recent pullback has seen Nvidia stock’s 50-day moving average (MA) breached, “placing next support at the February gap and Fibonacci retracement levels in the $742-$752 region,” Fairlead analysts noted.
“If this support zone is resolved, the February gap is likely to be filled and a secondary Fibonacci level around $615 will be reached over the next 2-3 months,” they added.
“Near-term oversold conditions exist, but there is plenty of room for medium-term oversold territory (and no DeMARK signals), which tells us to consider reducing exposure to NVDA before the rebound, with a lower high now more likely. against resistance at $974.”