2 Worst Performing Mega-Cap Stocks in January

Mega-Cap stocks are generally considered all-weather stocks due to their ability to protect investors from market volatility and to endure harsh economic downturns. However, mega-cap stocks NVIDIA (NVDA) and ASML (ASML) have been among the worst-performing names of late due to various macroeconomic headwinds and the Fed’s hawkish tilt. Read on.

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Companies with a market capitalization of more than $200 billion are considered mega-cap. They are typically industry leaders, characterized by strong brand recognition and global market presence. Such companies typically have solid financials and cash flows, which allows them to remain stable even during an economic downturn.

The stock markets corrected last month on investors’ concerns over rising inflation, geopolitical tensions between U.S and Russia of Ukraine, and the Fed’s signal that it will raise interest rates multiple times this year.

Nasdaq-listed NVIDIA Corporation (NVDA) and ASML Holding N.V. (ASML) were amongst the worst performing mega-cap stocks, falling more than 14% in price in January. The Nasdaq Composite Index posted its worst January performance since 2008, declining about 9%.

NVIDIA Corporation (NVDA)

Santa Clara, Calif.-based NVDA is an artificial intelligence computing company. It operates through the Graphics and Compute & Networking segments. Its Graphics segment includes its GeForce graphics processing unit (GPU), Quadro/NVIDIA RTX GPUs, and automotive platforms for infotainment systems. Its Compute & Networking segment includes data center platforms and systems for artificial intelligence, high-performance computing, and accelerated computing. NVDA has a $625.69 billion market capitalization. 

On Feb. 7, 2022, NVDA announced the termination of its acquisition of Arm Limited from SBG due to significant regulatory challenges. The deal’s collapse is a blow for NVDA because the acquisition would have been the largest semiconductor deal on record.

NVDA’s automotive revenue for its fiscal third quarter, ended Sept. 30, 2021, decreased 11.1% sequentially to $135 million. The company’s cash flow from operations fell 43.3% sequentially to $1.51 billion. Also, its operating expenses increased 25% year-over-year to $1.96 billion.

In January, the stock  declined 16.7% in price.

ASML Holding N.V. (ASML)

Headquartered in Veldhoven, Netherlands, ASML manufactures chip-making equipment. The company develops, produces, markets, sells, and services semiconductor equipment systems, consisting of lithography systems. Its products include systems and installed base products and services. It has a market capitalization of $268 billion.

On Jan. 7, 2022, ASML reported that there was a fire at its Berlin plant, which affected part of the production area for some of its critical machines. The company said it was looking to minimize the impact on output because the plant produces parts for its advanced extreme ultraviolet lithography machines that are needed to make innovative chips that are faster, cheaper, and more efficient.

For the fiscal fourth quarter, ended Dec. 31, 2021, ASML’s revenue decreased 4.8% sequentially to €4.98 billion ($5.68 billion). The company’s gross profit declined 0.3% sequentially to €2.70 billion ($3.08 billion). Also, its selling, general, and administrative costs increased 33.6% year-over-year to €202.50 million ($231.22 million).

Analysts expect ASML’s EPS and revenue for the quarter ending March 31, 2022, to decrease 50.4% and 27.2%, respectively, year-over-year to $1.91 and $3.83 billion. In January, the stock had declined 14.9% in price.

Click here to checkout our Semiconductor Industry Report for 2022

NVDA shares were trading at $264.42 per share on Wednesday afternoon, up $13.34 (+5.31%). Year-to-date, NVDA has declined -10.09%, versus a -3.99% rise in the benchmark S&P 500 index during the same period.

NVIDIA (NVDA) is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

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