Quick overview

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Nvidia (NVDA) and other US chip stocks are on course for a losing week following investors’ lackluster response to Nvidia’s high-profile earnings report on Wednesday. On Friday, Nvidia’s stock fell 4%, and is expected to lose 3% for the week.

The decline on Friday followed the release of a third-quarter earnings outlook by those chipmakers’ client, server maker Dell (DELL), that fell short of Wall Street’s projections. Additionally, a recent report revealed that Chinese tech giant Alibaba (BABA) is testing a new chip to compete with Nvidia and AMD in the Chinese market.

Several prominent Chinese companies are developing alternatives to Nvidia’s H20 China chip, and Alibaba is testing a new chip for AI inference.

Nvidia stated on Wednesday that it did not sell any H20 chips to China in the most recent quarter and that it is still awaiting clarification on new rules that would mandate that it give the US government 15% of the proceeds from those sales.
According to LSEG estimates cited by CNBC, Dell reported third-quarter earnings per share of $2.45, below the $2.55 anticipated.

Dell contributes more than 2% of Nvidia’s yearly revenue. The server manufacturer also accounts for about 1% of Broadcom (AVGO)’s revenue, 3.06% of Advanced Micro Devices (AMD), and 3.07% of Micron (MU). The stocks of AMD and Broadcom both dropped more than 3% on Friday.