Analog Devices leads chips lower as company says cancellations are 'slightly' increasing

Aug. 17, 2022 10:59 AM ETAnalog Devices, Inc. (ADI), NVDA, TXNAMD, INTC, QCOM, MU, ON, AVGOBy: Chris Ciaccia, SA News Editor21 Comments

Analog Devices headquarters in Silicon Valley

Sundry Photography/iStock Editorial via Getty Images

Analog Devices (NASDAQ:ADI) led the semiconductor industry lower on Wednesday after the analog chip provider topped estimates for the third-quarter and issued strong guidance, but said cancellations were starting to increase.

Looking ahead to the fourth-quarter, Analog Devices (ADI) said revenue would be between $3.05B and $3.25B, compared to expectations of $3.1B. At the $3.15B midpoint, the company expects operating margins to be 33.7%, plus or minus 1.3%, and adjusted operating margin to be 50.3%, plus or minus 0.7%.

However, the company warned of "economic uncertainty" on its earnings call, sending shares down more than 5% to $169.53 in early trading on Wednesday.

Texas Instruments (NASDAQ:TXN), which competes with Analog Devices (ADI) in the analog chip space, saw its shares decline more than 3.5% to $176.47 on back of the news.

Late last month, Texas Instruments (TXN) reported second-quarter results and issued guidance that topped expectations.

Nvidia (NASDAQ:NVDA) shares fell more than 3% to $182.59 on Wednesday after Bank of America said another cut from the GPU company could drive a "necessary reset" for the chip giant.

Analyst Vivek Arya noted that a "second cut" would help "clear the decks" ahead of Nvidia's (NVDA) new Lovelace gaming chip, as well as data center products, including the Hopper and Grace pipelines.

Advanced Micro Devices (AMD) fell more than 2.5% to $97.62 in early trading, while Intel (INTC), which competes with Nvidia and AMD, fell 2% to $35.48, nearing its 52-week low of $34.40.

Other chip makers also declined on Wednesday, including Broadcom (AVGO), Qualcomm (QCOM), Micron Technology (MU) and ON Semiconductor (ON), all of which fell 2% or more.

In addition to reporting earnings and issuing guidance, Analog Devices (ADI) also said that it increased its share repurchases to $906M in the quarter, returning a total of $1.3B to shareholders during the period, including $394M in dividends.

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