Marvell Technology shares dropped 18% Thursday morning.
Investors had high hopes for guidance from the AI chip maker.
Wall Street had been looking to the firm to re-energize the AI trade.
The move: Semiconductor manufacturer Marvell Technology fell nearly 18% Thursday morning, dropping to $73.94. The plunge extends a year-to-date loss of around 34.5%.
Why: While Marvell’s fiscal first-quarter outlook was slightly ahead of consensus expectations, it fell short of the highest expectations, failing to impress investors and bolstering fears that the AI trade is fading.
The firm projected $1.875 billion in revenue for the quarter, just above the $1.865 billion expected on Wall Street. It said it expects $0.61 in adjusted earnings per share, compared to consensus estimates of $0.60.
Marvell posted a slight beat on fourth-quarter revenue.
What it means: Heading into its earnings report, the firm’s results were eyed as a possible savior of the flagging AI trade.
In a note earlier this week, Bank of America hoped Marvell’s performance would reignite excitement for the tech after investors gave a lukewarm reception to Nvidia’s hotly anticipated results last week.
The high-growth tech trade has fallen on hard times recently, cooling amid mounting doubts over huge AI spending by Big Tech and demand for AI.
Instead of rousing investors, Marvell’s report has dragged the market lower when investors are badly in need of a fresh positive catalyst. It’s slide dragged other AI names, with Nvidia and Broadcom shedding about 3% and 5%, respectively in pre-market trading.
Broadcom’s earnings after the closing bell on Thursday are the next potential catalyst that could help AI stocks.
The so-called AI hyperscalers with exposure to also slipped Thursday morning. Microsoft, Meta, and Alphabet are all down over 1%.
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