Intel leads chip stocks decline after results, outlook weighs on investor sentiment

Intel (NASDAQ:INTC) led a decline in chip stocks on Friday after the company’s second quarter results and guidance worried investors and analysts alike.

Arm (ARM) -8%, Micron Technology (MU) -7%, ON Semiconductor (ON) -5%, Taiwan Semiconductor Manufacturing’s (TSM) -5%, Analog Devices (ADI) -4%, NXP Semiconductors (NXPI) -4%, Broadcom (AVGO) -3%, Texas Instruments (TXN) -3%, Nvidia (NVDA) -1%, and Qualcomm (QCOM) -1%.

Advanced Micro Devices (AMD) +2%, a competitor to Intel, was among the few which was in the green on Friday.

Intel’s lost about 25% of its market cap on Friday following its results and guidance, which disappointed investors. The chipmaker also announced that it would lay off about 15% of its employees, and suspend its dividend.

Raymond James’ analysts expected the third quarter outlook to be weak but were surprised by the magnitude, especially on margins.

Arm (ARM) continued Thursday’s sell-off into Friday following its quarterly results and guidance two days ago.

Meanwhile, Nvidia’s stock felt the pinch following reports that U.S. Department of Justice has launched a probe into the company after complaints from rivals that the chipmaker allegedly abused its market dominance in selling chips that power AI products. Nvidia is also facing scrutiny by the DOJ over possible antitrust issues related to its planned acquisition of Israel-based startup Run:ai.

Separately, Hedge fund Elliott Management said that Nvidia is in a bubble as the AI theme pushing its share price is overhyped.