What happened
Semiconductor stocks tumbled in afternoon trading Thursday. As of 3:10 p.m. ET, Nvidia (NVDA +5.93%) shares have lost 2.6% of their value, Micron Technology (MU +4.04%) is down 4.5%, and Advanced Micro Devices (AMD +18.37%) is leading the whole pack lower -- down 5.2%.
Why these stocks are falling is the question.
Image source: Getty Images.
So what
There's no news on the wires to explain the declines, after all -- no negative press releases from the companies themselves, no analyst downgrades, nor even so much as a lowered price target. The only real "news," so far as I can tell, is good news for Micron: the announcement that Fitch is upgrading Micron's debt rating to BBB, which moves the company's debt out of the "speculative" category and makes it "investment grade" -- indeed, a "good credit quality."
In its note yesterday, Fitch praised the company for its "conservative financial policies" and noted that "component supply shortages" (i.e., the well-publicized global semiconductor shortage) "are amplifying strong secular demand for memory and storage."
Now what
Now granted, there is still the elephant in the room -- the ongoing conflict in Ukraine that began last week. But as Marketwatch pointed out earlier this week, even this isn't necessarily a good reason to be down on semiconductor stocks, inasmuch as Russia is a "de minimis direct purchaser of semiconductors" and Ukraine, with a population less than a third the size of Russia's, is even smaller.
Citing a report from investment banker Bernstein, Marketwatch proceeded to point out that "Russia accounts for less than 2% of global PC shipments, ~2% of handset and smartphone shipments, ~1% of server shipments, and ~2% of automotive shipments." Russia and Ukraine, combined, don't make up even 3% of the market for semiconductors.
What's more, most investors seem to have realized this already. Since Russian forces assaulted Ukraine last week, the stock prices of Nvidia, Micron and AMD are all actually up, rather than down. Long-term, I see no reason why that cannot continue to be the trend.
