While Nvidia is garnering a lot of negative headlines, trade war and macroeconomic weakness are weighing on the semiconductor industry as whole.
The Philadelphia Semiconductor Index 1.3% on Friday and lost about 7% since August 8 on concern over NAND pricing and the US-China trade war, analysts say.
Nvidia fell 4.5% on Friday after reducing its guidance and decline in cryptocurrency-related sales, while Applied Materials, Inc. (AMAT) retreated 7.1% on Friday, the biggest drop among the names included in the index. Teradyne, Inc. (TER) slid 3% as well.
RBC analyst Mitch Steves said the "macro issues" were to blame for the decline in semiconductor stocks.
"A major macroeconomic rollover bodes negatively for semiconductor companies, which are the first node in a long technology supply chain and could experience a revenue decline greater than declines in global GDP," he said in a note published on August 17.
Steves advised investors to "buy the dip", setting a price target of $310.
NAND pricing is another challenge for the industry.
The NAND flash market is currently oversupplied, as detailed in the DRAMeXchange report, which is driving prices down and adversely affecting the semiconductor industry.
"I think the semiconductor industry has definitely had some setbacks," says Shebly Seyrafi, FBN Securities managing director of technology & internet research, in and interview with Real Money. "One is that NAND pricing is starting to decline after increasing for so many years."
Seyrafi added that geopolitical risks are playing into the sector's skid as well.
"Trade war concerns have definitely had an impact because these companies do a lot of business with China," he explained. "It's a confluence of issues."
Despite the overall disruption in the semiconductor industry, Seyrafi remained confident in Nvidia specifically, issuing an unchanged price target of $300 and a buy rating.
In the past month, a confluence of issues has affected other semiconductor companies more severely than the headline-grabbing Nvidia.
Micron Technology Inc. (MU) is down just over 18% from a month ago, Intel Corporation's (INTC) share price has fallen by about 10% from a month ago, and Cree, Inc. (CREE) shares have fallen just over 11% since August 9.
In this context, Nvidia's 4% slide on earnings seems less catastrophic.
It is worth noting that while the semiconductor industry has been on a slide, prompting analysts from Morgan Stanley to issue a "cautious" rating on the industry, there has been one outlier in Advanced Micro Devices (AMD) .
The semiconductor company has risen over 14% from a month ago on the back of its inroads into Nvidia's gaming market.
As reported earlier, Goldman Sachs' downgrading of Intel in favor of AMD was a significant boost for the company.
"I respect AMD and Intel, but Nvidia has a lead on graphical processing that is not going to be diminished anytime soon," Seyrafi told Real Money. "Though AMD will be much more of a player in gaming."
Overall, he affirmed his belief, in concurrence with Steves, that Nvidia remains the strongest stock in the industry.