In the last nine years, the semiconductor industry has been rising at a steady rate. With earnings season, we are starting to see signs of weakness in this industry. In turn, stock prices are reacting to negative and lackluster earnings by gapping down after hours. Will these stocks be able to recover?
* Advanced Micro Devices ($AMD) announced earnings on Monday, coming in line with estimates. However, this disappointed investors and the stock price took a large hit after hours, more than 10% drop from mid $13. It has dropped even further during the trading hours on Tuesday. $AMD was considered one of the best performers of 2016 and many have made plenty of money on this stock. We will have to see if $AMD can flatten and bounce from this drastic drop.
* Maxim Semiconductor ($MXIM) also reported earnings beat on April 20. However, initial reaction was negative. It has recovered in stock price after about a week.
* Apple announced in early April that they are developing their own graphics chip. This shocked the supplier, Imagination Technologies ($IGNMF). The timeline is two years away to stop licensing their intellectual property. But, the stock reaction was immediate and tanked the stock by more 50%. It is an interesting trend, where technology companies are finding new avenues for cost reduction by developing intellectual property in-house.
**Reminder:** The first half of the year tend to be a slow season for technology companies. In turn, the semiconductors supplying to these companies will have to work harder to grow and maintain quarter to quarter earnings.