Weak performance for tech stocks worsened for 2022 in the last week. Advanced Micro Devices (AMD) is a notable loser, losing 10% in value. Nvidia (NVDA) fared worse, down 12%, and Intel (INTC) down 3.97%. Markets spared few semiconductor stocks, selling them in anticipation of a supply glut.
The market is irrational if it believes the chip sector will have excess supply. At best, prices above MSRPs for AMD and Nvidia’s graphics cards will return from 300% to 100%. In addition, both GPU firms are refreshing their products. Nvidia will still come out ahead because its 4090 Ti is the highest performing product on the market. Its RTX 4090, RTX 4080, and RTX 4070 release set for Sept. 2022 will lift sales. Gamers who waited for the RTX 30 series prices to drop will also open their wallets.
AMD’s RX GPU refresh is marginal at best. Its CPU update, the 5800X 3D vertically stacked cache is the last chip on the Zen 3 platform. AMD will launch Zen 4 chips that support DDR5 and faster PCI later this year. Intel is already ahead of Intel: Alder Lake requires Z690 boards and supports DDR5 memory.
Investors should add chip stocks to the watch list. Their sell-off may prove temporary.