What Happened?
Shares of semiconductor quality control company Nova (NASDAQ: NVMI) fell 4.7% in the morning session after a broad-based sell-off in the semiconductor sector as industry bellwether Applied Materials (AMAT) released a weaker-than-expected forecast.
The downturn was sparked by semiconductor equipment bellwether Applied Materials (AMAT), which saw its stock plummet after releasing a weaker-than-expected forecast. Applied Materials projected current-quarter revenue of about $6.7 billion, far below the $7.3 billion analysts were forecasting. The company cited a slowdown in its China business, reduced demand for advanced chips, and uncertainty around pending export licenses as key reasons for the soft outlook. Because Applied Materials is a major player, its cautious guidance created a chilling effect across the industry, leading to a broad-based sell-off. The negative sentiment was significant enough to drag down shares of other chip-related companies, including Nova, despite any of its own recent positive news.
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What Is The Market Telling Us
Nova’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock dropped 3.1% on the news that the U.S. jobs report for July came in significantly weaker than expected while new widespread import tariffs were announced, sparking fears of a potential economic slowdown. The U.S. economy added only 73,000 jobs, far below estimates, and massive downward revisions to the prior two months painted a much weaker picture of the labor market. This has stoked recession fears, which would directly impact demand for chips used in countless products. Compounding these worries, the White House announced new tariffs, including a 20% levy on imports from Taiwan, a global hub for chip manufacturing. This dual shock of slowing domestic growth and renewed trade friction creates a challenging outlook for the highly cyclical and globally connected semiconductor industry, leading to a broad-based sell-off.
Nova is up 26.4% since the beginning of the year, but at $256.41 per share, it is still trading 10.5% below its 52-week high of $286.38 from July 2025. Investors who bought $1,000 worth of Nova’s shares 5 years ago would now be looking at an investment worth $4,532.
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