Global chip stocks continue slide, wiping out $240 billion in value

Yahoo Finance's Brad Smith and Brian Sozzi discuss why the chip sector has become one of the most hated in the stock market.

Video Transcript

[AUDIO LOGO]

BRIAN SOZZI: It's time to check in on a few hot tickers on the Yahoo! Finance platform this morning, starting with Taiwan Semiconductor. Shares taking a hit from President Biden's new restrictions on semiconductor exports to China.

And I really just love the breakdown that our very own Akiko Fujita did on this one yesterday. Complicated situation, but at the end of the day, you have that headwind-- new headwind, I would argue-- combined with the fact that you have a slowing economy, you have chip estimates for by analysts coming down across the board ahead of earnings season, you have the PC market slowing down. And you just get the sense going to be a challenging few quarters, I think, for these chip companies.

BRAD SMITH: Yeah, it's been really interesting, especially in the PC market. IDC was out with some data yesterday actually, just about how much the PC market had been slowing down. And particularly here, shipments declining another 15% in the third quarter of 2022, according to their tractor. Now-- tractor, excuse me. Now, this-- [CHUCKLES] this tracker for IDC, it really does outline, especially among the total units, the 74.3 total units that were accounted for in global shipments during the third quarter.

It really points out how much semiconductors, but additionally, how much some of the other personal technology companies are also gonna be set to be hit on this. And we're already seeing-- whether we've already seen it from AMD or some of the other companies that have said even earlier back in August-- you think about Nvidia and what they were spelling out-- how much more of a decline in this PC market is set to still hit many of these semiconductor and personal computing businesses as well.

BRIAN SOZZI: Right. And the chip space, I think, is now one of the most hated spaces in the entire market. These stocks have been absolutely obliterated. They've gone really quickly from trading at premium multiples, P-multiples earlier in the year, to now just be-- just continuing to see downgrades, estimate revisions, and trading in some cases near trough multiples. It's almost-- it's really remarkable to see.

BRAD SMITH: Yeah, once a darling for the markets. Now, certainly, declining [LAUGHS] precipitously over these past-- almost year. You point back to November of 2021.

BRIAN SOZZI: Yeah. And then we saw, you know, AMD, what, they came out a couple of days ago with a big morning here.