Some of the shine is wearing off shares of Nvidia and other U.S. semiconductor companies after a stunning 2023 rally, as investors weigh steep valuations, rising Treasury yields and signs of industry unease.
But performance for the group has stalled. The SOX semiconductor index is off over 7% this month, versus a 2.3% drop for the broad S&P 500, while shares of Nvidia - a driver of the broader market’s rally this year - have declined more than 14% in September. As the stocks rose this year, so did valuations. At the end of July, the 21-stock S&P 500 semiconductors and semiconductors equipment industry group was trading at 28.5 times forward 12-month earnings estimates, compared to its 10-year average P/E of 16.5 times, according to LSEG Datastream.
Valuations are coming under further pressure from the rise in Treasury yields. Higher yields on Treasuries - which are seen as virtually risk free - offer investment competition to equities, viewed as a riskier asset class.
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Nvidia, other US chip stocks stall over valuation, industry worriesSome of the shine is wearing off shares of Nvidia and other U.S. semiconductor companies after a stunning 2023 rally, as investors weigh steep valuations, rising Treasury yields and signs of industry unease. Chip stocks soared to start the year, with the Philadelphia SE Semiconductor index rising over 50% through July. No stock symbolized the chip industry's success more than Nvidia, whose shares tripled in 2023 as the company's market value topped $1 trillion, driven by excitement over the central role of the company's products in artificial intelligence applications.
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Nvidia, other US chip stocks stall over valuation, industry worriesBy Lewis Krauskopf NEW YORK (Reuters) - Some of the shine is wearing off shares of Nvidia and other U.S. semiconductor companies after a stunning 2023 ...
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