Shares of chipmakers that make processors for personal computers and other devices that run on Microsoft (MSFT) - Get Report software plunged on Thursday after the world's most valuable tech company warned the coronavirus will have a negative impact on sales and earnings.
Shares of Intel (INTC) - Get Report, Nvidia (NVDA) - Get Report, Advanced Micro Devices (AMD) - Get Report and Micron Technology (MU) - Get Report were all trading lower on Thursday in the wake of Microsoft’s warning that its supply chain in China is coming back online at a slower-than-expected pace in the wake of the Chinese Lunar New Year production halt and coronavirus outbreak.
Microsoft’s China supply chain “is returning to normal operations at a slower pace than anticipated,” the company said. “As a result, for the third quarter of fiscal year 2020, we do not expect to meet our More Personal Computing segment guidance as Windows OEM and Surface are more negatively impacted than previously anticipated.”
All other components of the firm’s third-guidance remain unchanged, the company said.
While Nvidia already has stated that it expects revenue to take a hit of about $100 million from the coronavirus epidemic, that was before Microsoft’s own warning this week. Intel and AMD have yet to make comments about the impact of the coronavirus on their bottom lines.
Nvidia is expected to get hit particularly hard. Nomura Instinet analyst David Wong on Tuesday downgraded the company’s stock to reduce from neutral as part of his broader assessment that the deadly coronavirus is posing a growing risk to the global semiconductor industry.
"While there has been a lot of attention on the supply chain disruptions associated with Covid-19, we think many investors and companies may have underestimated the risk of the current issues impacting electronics end market demand through 2020,” Wong said.
“We remain cautious on the chip industry overall and selective in our chip and chip-equipment stock picks.”
PC makers and other companies that operate using Microsoft software were also trading lower, including Hewlett Packard Enterprise (HPE) - Get Report, Lenovo and Dell (DELL) - Get Report, which will unveil its most recent quarterly earnings and sales numbers on Thursday.
Shares of Intel were down 3% at $57.86 in trading on Thursday, while shares of Nvidia were down 3.17% at $259.01. AMD stock was down 5.96% at $44.66, while Micron stock was down 1.22% at $51.73.
Shares of Microsoft were down 3.09% at $164.92.