Pacific Crest chip analyst Michael McConnell this morning warns that there are some “dark clouds forming” for Nvidia (NVDA) and Advanced Micro Devices (AMD), based on his listening to comments from Asia’s supply chain....MORE
McConnell, who has Sector Weight ratings on shares of both AMD and Nvidia, writes that he was surprised by the sudden negative tone about “desktop” graphics cards:
By far, the most surprising development during our quarterly supply-chain conversations in Asia was a notable tone change at several first-tier desktop graphics card manufacturers surveyed regarding sell-through and inventory levels in the channel. Our specific findings were as follows: High-end NVIDIA GeForce GTX 1080 and 1070 card inventory levels have risen to 2 to 2.5 months in the channel versus targeted levels of 1 to 1.5 months due to weaker-than-expected sell-through in late October and November. Two weeks ago, desktop graphics card manufacturers began to experience order pushouts and cancellations of GTX 1080 and 1070 cards from channel customers ahead of the holiday season. Given the excess supply situation, GeForce GTX 1080 pricing has dropped ~10% in the channel, with desktop card manufacturers now unwilling to order product due to perceived working capital risk....
NVDA is down $2.95 (3.21%) at $88.87.