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Below are AI-generated insights on moves in the information technology sector, powered by MarketReader technology.

Friday, August 2

VGT [-2.5%]
The Vanguard Information Technology ETF (VGT) has declined by 2.3% in pre-market trading, coinciding with a 1.05% drop in the S&P 500 Index. Key holdings have significantly underperformed, with NVIDIA facing a Department of Justice investigation and criticism from Elliott Management, while Intel's outlook has worsened due to downgrades and missed earnings. Apple reported mixed results, beating earnings estimates but experiencing a decline in iPhone revenue. Microsoft showcased new games at gamescom 2024 amid declining Xbox hardware sales. Additionally, the US Non Farm Payrolls report for July revealed a slowdown in job growth, adding only 114K jobs compared to expectations, which may further influence VGT's performance given its historical sensitivity to such economic indicators.

TSM | $151.09 | -4.5% | -176.3B

NVDA | $104.72 | -4.2% | -109.3B

AAPL | $215.15 | -1.4% | -47.0B

NVDA | -4.2% | -109.3B
NVIDIA Corp is experiencing a significant decline, aligning with the broader market's downward trend. The U.S. Department of Justice has launched an investigation into NVIDIA, prompted by competitor complaints regarding potential market dominance abuse in AI chip sales. This scrutiny has coincided with Elliott Management's assertion that NVIDIA is in a bubble, labeling the AI sector as overhyped. Additionally, recent U.S. Non Farm Payrolls data revealed job gains below expectations, contributing to volatility in NVIDIA's stock. The Average Hourly Earnings YoY also fell short of forecasts, while the unemployment rate rose, further intensifying market uncertainty surrounding NVIDIA and the technology sector.

INTC | -25.0% | -23.2B
Intel Corp's stock has dropped significantly amid a series of analyst downgrades and disappointing financial results. UBS has reduced its price target to 32, JP Morgan to 26, Barclays to 25, and Goldman Sachs to 22. The company reported a second-quarter earnings miss of 0.02 per share, falling short of the consensus estimate of 0.10, with revenue at 12.83 billion against expectations of 12.94 billion. Intel has announced a $10 billion cost reduction plan that includes over a 15% workforce reduction and the suspension of its dividend starting in Q4 2024. For Q3, Intel projects a loss of 0.03 per share and revenue guidance between 12.5 billion and 13.5 billion, also below analyst estimates. Concurrently, the U.S. Non-Farm Payrolls data for July showed only 114K jobs added, contributing to a rise in the unemployment rate to 4.3%.

MCHP | -6.6% | -2.8B
Microchip Technology Inc is experiencing a significant price drop, aligned with a broader market decline. The company reported mixed first-quarter financial results, with earnings per share of $0.53 slightly exceeding expectations, while quarterly sales of $1.241 billion fell short of the forecasted $1.242 billion and marked a considerable decrease from the previous year's $2.289 billion. Guidance for the second quarter anticipates adjusted earnings between $0.40 and $0.46 per share on revenue of $1.12 billion to $1.18 billion, both below analyst expectations. Following these results, several analysts revised their price targets downward. Concurrently, the Direxion Daily Semiconductor Bull 3x Shares dropped significantly, reflecting sector pressures, while Intel Corp faced a sharp decline after multiple downgrades and disappointing results, further affecting sentiment in the semiconductor space. The Nasdaq 100 Index also fell notably, contributing to the overall negative market environment.

SNPS | -3.9% | -3.1B
Synopsys Inc (SNPS) has experienced a notable decline, moving lower in tandem with the broader market. The VanEck Semiconductor ETF has dropped significantly, reflecting considerable sector pressures that likely impact Synopsys given their historical correlation. The Nasdaq 100 Index has also decreased, indicating macroeconomic factors are influencing market sentiment. Additionally, the US Non Farm Payrolls report for July 2024 revealed job growth below expectations, with only 114K jobs added against a forecast of 175K. This report coincided with an increase in volatility for Synopsys and the Information Technology sector, further compounded by a rise in the US Unemployment Rate to 4.3%, exceeding expectations.

AMAT | -4.5% | -6.9B
Applied Materials Inc has experienced a notable decline, moving down significantly in tandem with the broader market. The Direxion Daily Semiconductor Bull 3x Shares has dropped sharply, reflecting sector-wide pressures. Concurrently, the Nasdaq 100 Index has also decreased, indicating negative sentiment in the macro environment. Additionally, Applied Materials faced a setback as its planned $4 billion Silicon Valley R&D facility was rejected for CHIPS Act grants by U.S. Commerce Department officials. This decision raises concerns about the availability of direct subsidies for major chip equipment makers under the CHIPS Act. Moreover, the recent U.S. Non Farm Payrolls report showed weaker job growth than expected, which may further influence Applied Materials' stock volatility.

GDDY | +4.8% | +998.3M
GoDaddy Inc's shares are trading higher following the release of better-than-expected Q2 sales results. The company reported quarterly sales of $1.12 billion, slightly exceeding the analyst consensus estimate of $1.11 billion. Although the earnings per share of $1.01 fell short of the expected $1.07, this figure marks an 87% increase year-over-year. Barclays has raised its price target for GoDaddy to $165 from $150, maintaining an Overweight rating, while Piper Sandler has increased its target to $160. Additionally, GoDaddy provided revenue guidance for Q3 FY2024 at $1.1 billion, aligning with expectations. The stock has increased by nearly 5% since Thursday, outperforming its sector peers.

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