Some of the biggest drivers of the ongoing market rally that began early last year are the advances in artificial intelligence (AI). These next-generation algorithms and the semiconductors that power them could spark a wave of increased productivity.
The potential to profit from these advances has fueled rapid adoption of AI, which has sent purchases of semiconductors soaring. However, the chip industry could be among the first to feel the impact of the just-announced dockworkers’ strike.
With that as a backdrop, AI chip specialist Nvidia (NASDAQ: NVDA) slumped 3.9%, memory and storage chipmaker Micron Technology (NASDAQ: MU) tumbled 3.9%, semiconductor specialist Broadcom (NASDAQ: AVGO) fell 3.1%, and database and AI chipmaker Oracle (NYSE: ORCL) dropped 1.9%, as of 2:06 p.m. ET on Tuesday.
A check of all the usual suspects — financial reports, regulatory filings, and changes to analysts’ price targets — showed nothing in the way of any company-specific news to explain the falling stock prices. This suggests investors were focused on the work stoppage at some of the biggest ports in the U.S. and what that means for the semiconductor industry and the market rally in general.
Image source: Getty Images.
Strike while the iron is hot
On Tuesday, the International Longshoremen’s Association (ILA) began its first widespread strike in almost 50 years. The union said that tens of thousands of its members have begun to hit picket lines at ports along the Atlantic and Gulf coasts beginning at 12:01 a.m. Tuesday.
The ports on those two coasts are the destination for more than half the containerized products imported into the country. If the strike extends for more than a few days, there could be a ripple effect on the supply chain and, by extension, the broader economy.
Delays of everyday products could reignite inflation, cause shortages, and drive up prices. The longer the strike lasts, the more likely the chance of economic upheaval.
Gov. Kathy Hochul of New York said that “the food supply is secure right now,” urging consumers not to stockpile items unnecessarily. While a…
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