Chip Stocks Face Tougher Quarter and Year: MS

The once red-hot semiconductor sector is slowing down, with one team of analysts cutting their chip stock estimates for the first time in three years. In a recent research note, Morgan Stanley analyst Craig Hettenbach lowered his estimates for the chip sector in the fourth quarter and the year ahead. Hettenbach also reduced his price forecast for seven stocks including Qorvo Inc. (QRVO), Microchip Technology Inc. (MCHP), and TE Connectivity Ltd. (TEL).(See also: Goldman Warns on ‘Weak Fundamentals’ for Micron, Memory Chip Stocks.)"The Start of Inventory Correction"
Chip stocks have underperformed the broader technology market this year. The Philadelphia Semiconductor Index (SOXX) is up 9.5% year-to-date (YTD), while the Nasdaq Composite Index's return over the same period falls more in line with the S&P 500 Index, which has grown 9.4%. Morgan Stanley views the deceleration of chip stocks returns as a sign of "the start of an inventory correction."