What happened
Investors in Nvidia (NVDA +2.71%) stock just can't seem to catch a break. On Tuesday, shares of the graphics semiconductor giant dropped once again -- their fifth straight down day on the market -- and were down 2% as of 11:42 a.m. ET.
The reason: Once again, it seems Wall Street is simply finding cheaper ways to play the global semiconductor shortage than by buying Nvidia stock.
Image source: Getty Images.
So what
That's a shame, because as it turns out, the news for semiconductor manufacturers in general today is pretty good. In a new report just out from Citigroup, the investment banker finds that shipments of notebook computers rose 10% sequentially in November on robust corporate and government demand. This growth rate was nearly twice the 6% growth Citi had previously forecast, reports TheFly.com.
The problem is, in interpreting this data, Citi chose to speak highly of its potential to lift earnings at Advanced Micro Devices and Intel -- enabling both those chip companies to beat expectations in the fourth quarter. What Citi did not say, however, is that it expects Nvidia to beat earnings as well.
Now what
And that's the problem in a nutshell.
Just like yesterday, when a half dozen different analysts chimed in to sing the praises of cheaper chipmaker stocks such as Qualcomm, Micron Technology, and Broadcom -- but not Nvidia -- today we've got Citi continuing to go on about how attractive it finds the near-term prospects for Intel (which costs less than 10 times earnings) and even AMD (which costs 43 times earnings) -- but again, not Nvidia stock (which costs 93 times earnings).
Granted, long-term Citi still appears to prefer Nvidia over Intel and AMD (as of its last-reported rating, at least). But in the short-term, today, investors appear to be taking Citi's silence on Nvidia stock as a reason to sell.
