Key Takeaways

• Semiconductor stocks moved lower in advance of the latest financial results from artificial intelligence chipmaker Nvidia, due for release after markets close Wednesday.

• Rising expectations could make it more difficult for the company to impress investors.

• Given Nvidia's outsized influence, a big move in its stock price could have a significant impact on markets.

Semiconductor stocks lost ground Monday, ahead of the latest financial results from artificial intelligence (AI) darling Nvidia (NVDA), due for release after the markets close Wednesday.

Nvidia shares finished 2.3% lower Monday, giving back some of the stock's gains Friday amid rising expectations for the company's results. Other chip stocks also lost ground, with the PHLX Semiconductor Sector Index (SOX) falling 2.5% Monday.

Nvidia's Earnings Could Affect the Broader Market

Nvidia has been a key contributor to the record-setting run for U.S. stocks in 2024, with high expectations for the company's AI-fueled growth underpinning massive gains. In June, Nvidia briefly surpassed Microsoft (MSFT) as the world's most valuable company by market capitalization.

Given the chipmaker's outsized influence in major indexes, a big move in its stock price would affect the broader market.

Analysts have high expectations for Nvidia's upcoming report, projecting second-quarter revenue and earnings will more than double from the year-ago period. Their forecasts have also climbed in the last few days, which could make it more difficult for the company to impress investors.

Micron and AMD Slip Along With Nvidia Monday

Shares of Nvidia partner Micron Technology (MU) sank Monday as well, falling nearly 4% as Needham reportedly trimmed its price target on the stock to $140 from $150. Analysts cited a flat outlook for shipments of Micron's DRAM and NAND products.

Other chip stocks that slipped Monday included Lam Research (LRCX) and Advanced Micro Devices (AMD), which lost 3.4% and 3.2%, respectively.

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