The Ratings Game: Chip stocks just got sent a big warning

by | Oct 25, 2023 | Stock Market

Texas Instruments just sent a grim warning about the state of the semiconductor industry, and stocks across the sector are feeling the impact. The chip maker, which historically reports early in the earnings cycle and is viewed as an industry bellwether, cited weakening industrial demand Tuesday afternoon as it underwhelmed with its forecast. That struck one analyst as a “negative” read for the broader sector, especially those companies exposed to industrial trends.

Related: Texas Instruments’ stock slides after 3Q revenue miss, weak guidance “Texas Instruments’
weaker than expected Q4 outlook will likely weigh on semi stock performance over the next few days until we get additional reads from other companies,” Truist Securities analyst William Stein wrote as he lowered his price target to $150 from $165 and kept a hold rating on the stock. Stein pointed to the weakening in the industrial market identified by Texas Instruments. “We believe it’s fair to assume that the weak Q4 outlook is related to a continuation of that trend,” the analyst added, noting that this is most problematic for Analog Devices Inc.
Microchip Technology Inc.
Arrow Electronics Inc.
and Avnet Inc.
all of which have industrial exposure. Analog Devices shares are down 2.3% Wednesday, while Microchip Technology is down 4%. Shares of Arrow Electronics are down 0.4% and Avnet’s stock is down 0.6%. Texas Instruments shares, meanwhile, are down 3.8%. The broader chip market a …

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