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Microsoft Sneezes and Chipmakers Catch Cold

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It's an example of intricate and connected the global supply chain really is.

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 its supply chain in China.

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.

Still, that was enough to prompt investors and analysts to turn away from semiconductor stocks, as well as shares in personal computer and other equipment makers.

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, also saw steep stock-price drops on Thursday. 

Nvidia and Microsoft are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells NVDA or MSFT? Learn more now.

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