Wall Street's biggest bank just delivered a message that sounds contradictory at first. Chip stocks could fall further from here, and that is not necessarily bad news, according to one of the sector's most closely watched **** ysts.
The call came two days before Nvidia reported earnings on Aug. 26. Nvidia beat on every key metric and guided ahead of consensus for Q3. But what Bank of America was telling investors going into that report was more nuanced than a simple read on the earnings print.
Bank of America **** yst Vivek Arya, who ranks 229 out of more than 12,000 **** ysts tracked by TipRanks with a 58% success rate, sees roughly 10% further downside risk for the Philadelphia Semiconductor Index (SOX).
A decline of that size would push the SOX back to its valuation discount versus the S&P 500 before ChatGPT's debut in November 2022, CNBC reported.
Several factors are weighing on the group in the near term. Arya pointed to rising interest rates, public pushback on data center projects, geopolitical tension, worries over circular financing arrangements between AI companies, and heavy investor positioning, with chips now running about 13% overweight against the broader S&P 500.
#analysts
The call came two days before Nvidia reported earnings on Aug. 26. Nvidia beat on every key metric and guided ahead of consensus for Q3. But what Bank of America was telling investors going into that report was more nuanced than a simple read on the earnings print.
Bank of America **** yst Vivek Arya, who ranks 229 out of more than 12,000 **** ysts tracked by TipRanks with a 58% success rate, sees roughly 10% further downside risk for the Philadelphia Semiconductor Index (SOX).
A decline of that size would push the SOX back to its valuation discount versus the S&P 500 before ChatGPT's debut in November 2022, CNBC reported.
Several factors are weighing on the group in the near term. Arya pointed to rising interest rates, public pushback on data center projects, geopolitical tension, worries over circular financing arrangements between AI companies, and heavy investor positioning, with chips now running about 13% overweight against the broader S&P 500.
#analysts
2 months ago
