Nvidia, one of the highest fliers in the S&P in recent months is getting hammered Tuesday, along with other stocks seen as being closely tied to seemingly ascendant tablet technology. The stock has had a ridiculous run lately, up 71% in the last three months, even with today’s 8% fall. Other tablet stocks such as ARM Holdings and Broadcom are also getting hit today, down around 7% and 3%, respectively.
So what seems to have gotten everyone so worried about these shares? Semiconductor analysts point to this story in Barron’s, which wonders whether the mad rush toward tablets could leave some suppliers with a glut of inventory if sales don’t live up to all the excitement. Barron’s Tiernan Ray writes:
This year quickly is turning into the Year of the Tablet, as a report by Morgan Stanley declared last week. Just about every vendor of electronic gadgets has announced a tablet-style computer meant to compete with Apple‘s (ticker: AAPL) iPad. Morgan Stanley’s analysts estimate such devices could represent 13% of PC shipments in 2011, and 29% of the tablets sold will be taken away from PC sales.
The problem, as always, is with expectations. In his latest newsletter, Barron’sRoundtable member Fred Hickey writes that the number of companies declaring their intention to sell a tablet computer is “comical” and will lead to an “epic glut” later this year.
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