stocks snapped a long streak of record highs Thursday, led lower by shares of Xilinx Inc (NASDAQ:XLNX)., which had topped Wall Street earnings estimates but not to the degree that’s led to the stock’s doubling price over the past 12 months.
The PHLX Semiconductor Index, -1.81% closed down 1.8% at 1,560.32, off Wednesday’s closing high of 1,589.02, the sixth closing high in a row for the index. In comparison, the S&P 500 index, -0.04% closed down less than 0.1% and the Nasdaq Composite, +0.21% rose 0.2%. For the year, the SOX index is up more than 35%, while the S&P 500 is up nearly 17% and the Nasdaq is up 22%.
On Thursday, Xilinx Inc (NASDAQ:XLNX), -1.17% shares dropped 17% to close at $115.86 even as quarterly results topped Wall Street estimates late Wednesday. Xilinx shares, however, are still up 82% over the past 12 months.
Analysts agreed that while communications chip sales, like 5G chips, were strong, Xilinx data-center sales were disappointing.
Susquehanna Financial analyst Christopher Rolland, who has a positive rating on Xilinx and raised his price target to $150 from $110, even said that the stock was “a bit ahead of the story.”
“While the 5G story is progressing well, the biggest hurdle for XLNX was that the stock got ahead of itself, up +56% vs. +34% for the SOX since their last report,” Rolland said.
Some analysts were not as generous, as two out of the 27 who cover the stock downgraded Xilinx following results. On the other hand, 10 analysts hiked price targets, while only two lowered theirs, for an average $128.43 target, according to FactSet.
“Though above consensus, with shares up 66% YTD, we believe numbers failed to meet lofty expectations following a string of significant beat/raises,” said Cowen analyst Matthew Ramsay in a note. Ramsay has a market perform rating and lowered his price target to $120 from $130.
The focus this earnings season on 5G chips was evident after Texas Instruments (NASDAQ:TXN) , -1.38% reported earnings above Wall Street estimates, and following the recent settlement between Apple Inc (NASDAQ:AAPL). AAPL, -0.24% and Qualcomm (NASDAQ:QCOM), -0.92% , which prompted Intel Corp (NASDAQ:INTC), -7.13% to announce it was exiting the 5G smartphone modem market soon after.
Silicon Laboratories Inc (NASDAQ:SLAB), -4.61% shares pulled back 4.6% to close at $104.97 on Thursday following a Wednesday 18% rally after the maker of analog-intensive and mixed-signal integrated circuits reported earnings and an outlook that topped Street estimates.
Bucking the slide in chip-related stocks, shares of Lam Research Corp (NASDAQ:LRCX), +4.93% finished up 4.9% at $205.08 after a big beat on earnings late Wednesday.
With most of the sector down, other chip stocks showing gains Thursday were Qorvo Inc (NASDAQ:QRVO), +0.06% and Teradyne Inc (NASDAQ:TER), +0.33% , which had rallied Wednesday after the company handed in an earnings beat.
The chips should be down Friday as Intel shares plummeted after hours Thursday when the chip giant provided an outlook that was well below Wall Street estimates and reported a worse-than-expected decline in data-center sales.
The VanEck Vectors Semiconductor (NYSE:SMH) fell $2.69 (-2.29%) in after-hours trading Thursday. Year-to-date, SMH has gained 19.87%, versus a 9.61% rise in the benchmark S&P 500 index during the same period.
SMH currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #16 of 68 ETFs in the Technology Equities ETFs category.