NVDA, MRVL, SNDK, SKHY, And Other Chip Stocks Slide: Analyst Says Investors Are Rotating To Safety Amid Iran War Tensions

• Reitzes said that higher oil prices stemming from supply disruptions in the Strait of Hormuz could fuel inflation, pressure central banks to raise rates, and increase semiconductor input costs.
• He added that he is looking forward to upcoming capital expenditure plans from Big Tech companies and hyperscalers for clues about where chip stocks could head next.
• Reitzes said that he believes no hyperscaler would want to give up on AI and as a result, he does not foresee capex cuts from companies in this segment.

The rout in chip stocks continued into Thursday, with Nvidia Corp. (NVDA), Marvell Technology Inc. (MRVL), SanDisk Corp. (SNDK), SK Hynix Inc. (SKHY), and other semiconductor stocks declining between 2% and 8% in morning trade.

The Direxion Daily Semiconductor Bull 3X Shares (SOXL) ETF was down more than 10% at the time of writing, while the iShares Semiconductor ETF (SOXX) fell over 3%.

During an interview with CNBC, Melius’s Head of Technology Research, Ben Reitzes, said that some of the decline can be attributed to investors flocking to safety and rotating out of chip stocks amid tensions over the war in Iran.

“I think the war… when something happens like this on a macro level and input costs could potentially spike up, the market may flock to safety. Some of this is really just rotation, I believe it is temporary, hopefully,” he said.

Reitzes cautioned that it is too early to gauge how the Iran war could affect input costs across the semiconductor industry. His comments come amid a spate of strikes by the U.S. and Iran following the termination of the ceasefire between the two countries last week.

Reitzes Explains The Link Between Iran War And Input Costs For Chipmakers

Reitzes said that if crude oil prices go up as a result of the supply disruption due to the Strait of Hormuz standoff between the U.S. and Iran, it could put pressure on central banks to raise interest rates to contain inflation, thereby causing input costs to rise.

“There are some concerns about helium, LNG impacting electricity costs which can go through the [supply] chain,” he said.

Reitzes downplayed concerns that AI and chip stocks are overvalued, adding that the AI trade remains on track.

“Just a few weeks ago, we were on that path, and I don’t think anything’s really changed,” he said.

Reitzes Looks Forward To Hyperscaler Capex News For Clues Ahead

Reitzes said he is looking forward to upcoming capital expenditure plans from Big Tech companies and hyperscalers for clues about where chip stocks could head next.

Alphabet Inc. (GOOG, GOOGL), Intel Corp. (INTC), Microsoft Corp. (MSFT), Meta Platforms Inc. (META), Apple Inc. (AAPL), Amazon.com Inc. (AMZN), and other tech giants are scheduled to report their latest quarterly results over the next two weeks.

“I think when you see the fundamentals come out for hyperscalers, you’ll see capex increases, not decreases,” Reitzes said, while adding that he does not believe any hyperscaler would want to give up on AI. As a result, he does not foresee any company in this segment trimming its capex plans.

The tech-heavy Nasdaq Composite index was down nearly 1% at the time of writing.

The Invesco QQQ Trust (QQQ) is up 27% over the past 12 months, while the iShares U.S. Technology ETF (IYW) is up 38%.

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