Semiconductors have become increasingly important over recent years. Outside of powering our smartphones, TVs, and laptops, these silicon-based devices are critical to a host of emerging technologies, including generative artificial intelligence (AI) and electric vehicles (EVs). Most people are already quite familiar with Nvidia (NASDAQ:NVDA), which maintains a clear stranglehold over the AI chip market and, in turn, has seen its earnings and share price soar. In turn, there are some semiconductor stocks in crisis.
Semiconductor firms already active in the AI space are reaping the benefits, but there is also a plethora of companies that have yet to move into the space and rely on consumer electronics or automotive end-markets to fuel their earnings growth. Both of those end-markets continue to reel from high interest rates and waning consumer demand. As a result, firms that have relied on these markets for sales have struggled.
Below we are going to discuss three semiconductor stocks in crisis that have delivered lackluster performance in 2024 and are worth ditching as soon as possible: INTC, MRVL, and GFS.
Intel Corportation (INTC)
Once a gem of the U.S. semiconductor industry, Intel (NASDAQ:INTC) has slowly morphed into a shadow of its former self. Manufacturing issues coupled with intense competition from competitors, such as Advanced Micro Devices (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA), have plagued the semiconductor giant for some years now. The advent of generative AI as well as the subsequent rise in demand for the advanced silicon chips that power it continue to expose how far behind Intel is compared to its peers.
The semiconductor firm’s first quarter earnings report for fiscal year 2024 beat Wall Street’s EPS estimates yet trailed forecasted sales figures. Intel’s largest business, Client Computing, which handles the processing power that goes into everyday PCs, grew 31% year-over-year to $7.5 billion. However, in the segment that should be a growth market for Intel – that is, its Data Center and AI business- continue lag.
Not to mention, Intel’s new AI processors, Gaudi 3, are still behind Nvidia’s Blackwell chips and won’t even be available in the market until later in the year.
Intel’s share price has plummeted nearly 40% on a YTD basis, making it a key stock to ditch in this market.
Marvell Technology (MRVL)
Marvell Technology (NASDAQ:MRVL) provides the essential infrastructure for data centers. Data centers have become prominent with the rise of cloud computing. Instead of maintaining servers on premise, many enterprises have and continue to opt to move their data onto a separately managed cloud network. Marvell’s systems-on-a-chip (SoCs) help to process the large amounts of data going through servers while their ethernet solutions facilitate connections.
While Marvell’s “Data Center” business has boomed in recent quarters, its other business segments have performed less than stellar. In particular, for fiscal year 2024’s Q1 results, Marvell’s “Data Center” revenue jumped 87% year-over-year to $816.4 million, largely due to demand for its AI-related products. However, Marvell’s “Carrier infrastructure,” “Consumer,” and “Automotive/industrial,” segments have suffered from sluggish growth. Telecom companies are still digesting massive inventory levels and the automotive industry is dealing with dampened consumer demand as interest rates remain elevated.
That is all to say, despite AI-related growth, Marvell’s exposure to other end-markets has severely decreased its growth prospects.
MRVL share price has risen about 16% on a YTD basis.
GlobalFoundries (GFS)
GlobalFoundries (NASDAQ:GFS) is a global semiconductor manufacturing business that specializes in complex integrated circuits (ICs). The foundry prides itself on its facilities being outside of Taiwan and China, emphasizing in their SEC Form 10K that “[the company offers their] customers the advantage of mitigating geopolitical risk and ensuring greater supply chain certainty.”
Similar to Marvell Technologies, GlobalFoundries has seen a number of impediments to its near-term growth due to struggling core end-markets. In the first quarter of fiscal year 2024, GlobalFoundries reported a 16% year-over-year decline in revenue from $1.8 billion in Q1’2023 to $1.5 billion. According to earnings call transcripts, a lack of demand for ICs in the foundry’s “Smart mobile devices” and “home and industrial IoT” end-markets led to declines in sales for those business respective segments. GlobalFoundries “communications infrastructure and date center” business also suffered from soft demand.
GFS shares have fallen nearly 20% on a YTD basis, and investors would be better off ditching the stock before things get worse.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.