MW Nvidia's stock selloff deepens after Marvell earnings: 'Boy, sentiment is rough.'

By Emily Bary

There's a 'crisis of confidence' on Wall Street when it comes to AI stocks, according to an analyst

Nvidia Corp.'s stock was among the many semiconductor stocks moving lower in Thursday morning action, in the wake of Marvell Technology Inc.'s earnings report which has put a further dent in the artificial-intelligence trade.

About three months back, Marvell $(MRVL)$ appeared to cement itself as an AI darling, thanks in part to a multiyear contract with Amazon.com Inc. that some analysts thought would set the company up on a much better growth path. With that backdrop, hopes were high heading into Marvell's report, and the company's slim beats with its results and outlook weren't enough for Wall Street.

"Boy, sentiment is rough for AI semis right now," Melius Research analyst Ben Reitzes wrote in a note to clients. "For the immediate-term, the negative reaction stems from what was only a slight revenue beat and raise," he adding, saying that buy-side expectations were likely for at least a $100 million upside. Marvell only beat the consensus view by about $10 million with its guidance.

Investors have been tougher on AI companies that saw their shares surge in recent years. Nvidia $(NVDA)$ also delivered a beat-and-raise performance last week, but its stock ended up posting its worst post-earnings drop since 2018 during the proceeding session.

Marvell's stock was off 20% Thursday - and other AI names are seeing share prices tick down. Nvidia shares were off more than 3%, while Advanced Micro Devices Inc. $(AMD)$ shares were down more than 2%. Shares of Broadcom Inc. $(AVGO)$, which is also in the ASIC business and will report its own results after the closing bell, were down more than 6%.

All components in the PHLX Semiconductor Index SOX are down in Thursday morning action.

Read: Nvidia's stock is doing things not seen in nearly a decade - and that's good news

Nvidia's stock is now off 16% on the year, while Broadcom's is down 22% and Marvell's is off 34%.

Mizuho desk-based analyst Jordan Klein described a "crisis of confidence" on Wall Street. While semiconductor companies have decent fundamentals and the support of strong capital-spending outlooks from cloud providers, investors are "believing more and more that AI stocks just cannot work no matter how much they beat or guide."

In his view, the second half of the year could be better for AI chip companies, especially following Nvidia's July-quarter earnings report.

For now, though, all eyes will be on Broadcom's earnings after the close. The good news, according to Klein, is that buy-side expectations for Broadcom seem lower than they were for Marvell.

But will that setup save Broadcom if the company goes on to deliver in-line results and guidance? "Probably not," Klein wrote. "Again, smoke in the movie theater looks to be thickening by the day. False alarm, or an inferno about to engulf you in your seat. Do you want to wait and find out?"

-Emily Bary

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March 06, 2025 09:54 ET (14:54 GMT)

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