What Happened?
Shares of semiconductor quality control company Nova (NASDAQ: NVMI) fell 3.6% in the morning session after stocks in the semiconductor sector pulled back, triggered by a disappointing forecast from chipmaker Marvell Technology. Marvell's shares plunged after the company's data center demand outlook and quarterly revenue forecast fell short of market estimates, disappointing investors. This news has stoked concerns about a potential cooling in the artificial intelligence (AI) chip market, which has seen elevated expectations recently. The weak guidance from a major industry player like Marvell has created negative sentiment, putting pressure on the entire semiconductor sector on Friday.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Nova? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Nova’s shares are extremely volatile and have had 38 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 9 days ago when the stock dropped 3.9% on the news that the major indices continued to pull back, with technology stocks accounting for most of the market's largest decliners. A key reason for this trend is that much of the recent market gains were concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed. Despite the downturn, some analysts viewed this as an opportunity to own some of the "Core AI winners." Dan Ives of Wedbush Securities commented, "In our view, the tech bull cycle will be well intact for at least another 2-3 years, given the trillions being spent on AI infrastructure/software/chips/power/apps looking ahead. This remains our tech playbook and investor roadmap." Additionally, mixed earnings reports from retailers, such as Target, have added to the market's weakness. Investors are closely monitoring these reports for insights into the broader economic health and the potential impact of new tariffs on inflation.
Nova is up 29.2% since the beginning of the year, and at $262.13 per share, it is trading close to 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 $4,938.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
