Advanced Micro Devices (NASDAQ: AMD) stock shed over 2% of its value in the pre-market trading Monday after Cathie Wood warned of potential market correction in the semiconductor sector.
In a recent interview with Bloomberg Businessweek Radio, Cathie Wood warned of a potential market correction looming over the semiconductor industry due to improvements in the supply chain.
She said,
“The one place we could see a correction — and it’s just a correction, we’re not calling it the end of this at all — is in the chip space.”
Wood, founder of ARK Investment Management, indicated that despite the semiconductor sector’s robust performance, there could be vulnerabilities, particularly for stocks like Nvidia Corporation (NASDAQ: NVDA).
Nvidia stock surged over 80% this year, following a substantial 240% increase in 2023. Wood, who invested in Nvidia in 2014, divested most of her position before the company’s significant rally last year.
Wood also acknowledged that the shortages in GPUs, exacerbated by the rise of artificial intelligence tools like OpenAI’s ChatGPT last year, are now showing signs of easing. Lead times for GPUs have notably decreased from eight to 11 months to around three to four months, suggesting a stabilization in the market.
She added,
“So that is suggesting that there was probably a lot of double and triple ordering as the word ‘shortage’ was making the rounds, and then those inventories will have to be digested.”
ARK’s Recent Actions in Chip Stocks
Earlier this week, ARK amassed $4 million worth of Taiwan Semiconductor (NYSE: TSM) stock in its portfolio.
Earlier this year, ARK made headlines for reducing its positions in two major chip stocks, Nvidia and Advanced Micro Devices, ahead of their Q4 results.
Jeremy Siegel, a renowned finance professor from the University of Pennsylvania’s Wharton School, previously warned about the soaring valuations of technology stocks, specifically Nvidia. He cautioned that the current enthusiasm for tech stocks might indicate an impending bubble.
Last month, when Nvidia gained $273 billion in value in a single day, making historical records, Wood commented,
“We’re just pivoting to another set of plays that most people have not discovered yet. Much like they did not understand that Nvidia was an AI play, really, until very recently.”
Advanced Micro Devices (NASDAQ: AMD) Stock Performance
AMD stock declined 1.89% to close at $207.39 on Friday. The traders had exchanged hands with 120,038,238 (120.03 million) shares compared to the average daily trading volume of 75.74 million.
Edward Cooke is a financial analyst, freelance writer, and editor. He has six years of experience in financial journalism. He has an in-depth understanding of equities markets, tracking major indices and providing real-time analysis on stock price movements, corporate earnings, and market sentiment.
