Semi-Conductor stocks are companies that make circuits for electronic applications. In simple terms they are required to run all types of computers including the ones in gaming and cars. Some popular semiconductor companies are Advanced Micro Devices (AMD), NVIDIA and Micron Technology inc.
Recently semiconductor giant NVIDIA has reported bad guidance in their next quarter that is described as a “warning” that they will have weaker than expected gaming sales. NVIDIA originally forecasted 8.1 billion for their fiscal quarter ending July 31st but have now slashed that forecast to 6.7 billion. Causing the stock , along with fellow semiconductor companies to see a fall in their share price.
There have been well documented supply issues during the COVID-19 pandemic for chip companies and the rest of the issues are still presenting themselves today. The issues have occurred for a variety of reasons, however, a large one was one automakers stopped ordering chips near the onset of the pandemic when vehicle sales saw a huge drop. By the second half of the year demand recovered much faster than anticipated for vehicles and many semiconductor companies had used their production to meet other chip needs their became a shortage.
Effects of the Shortage
This shortage can be seen in everyday life, with the high demand and low supply of vehicles both new and old. Delivery expectations for newly ordered vehicles is being pushed ahead and the cost of used vehicles has rocketed with the short supply. This likely stems from the supply shortage of semiconductor chips.
What comes next
Most semiconductor companies are increasing their throughput which should help infuse more supply going forward. However, for their to be stability in the market there must be equilibrium between supply and demand, hence the high cost of used car vehicles can be seen as in indirect attempt to curb the demand and bring supply and demand closer together.
The current supply issues in the semiconductor industry are great examples of how a difference in supply and demand in one industry can affect many other industries as well as the general market with it.
Staying informed on supply and demand differences in the news can help promote a better understanding of the general market and the stock market themselves!
This fall on November 12th we will have the Wealth Hacker Conference where there will be a Stock Hacker Academy course presented that can potentially help you learn how to cash flow with stock hacking the same way me and Erwin have been able to!
And don’t forget, those who never stop learning, never truly lose. Let’s win together. Did you have a chance to read our July’s article on how the stock market can be an extra income source for real estate investors or comparison of the ultimate side hustle.
Your Fellow Stock Hackers
Erwin and Cherry
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Your fellow Stock Hackers,
🍒Cherry & Erwin
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