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Has the mobile device speculative bubble burst?

by Scott Bicheno on 23 February 2011, 10:26

Tags: NVIDIA (NASDAQ:NVDA), Hewlett Packard (NYSE:HPQ), ARM

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We usually leave the stock watching to the weekly column on, but recent share price movement looks highly relevant to the mobile device market.

While Apple has been the most prominent stock to benefit from the mobile device boom, some chip companies have also seen rapid growth in their share prices. Specifically this has meant ARM - which designs part of the Apple A4 chip among many others including NVIDIA's Tegra. And it's NVIDIA that has experienced the strongest recent uplift, primarily due to the buzz around tablets running Google's Honeycomb OS, which have initially been required to run Tegra 2.

ARM saw its shares fall by over eight percent and NVIDIA nine percent yesterday, with no news specific to either of them apparently responsible. has frequently speculated that ARM's shares were overvalued and NVIDIA's shares have been heading that way, so it's possible that a correction is underway.

Incidentally, Market Watch has made us aware of a new investment fund designed specifically to trac stocks heavily exposed to the smartphone market. The First Trust NASDAQ CEA Smartphone Index Fund is worth following if you're interested in how investors are treating the mobile device boom.

The catalysts for investors abandoning optimistic valuations are clear. In the tech sector HP announced quarterly earnings below expectations and saw its shares fall by over 11 percent in pre-market trading. Among the factors it held accountable for this miss was weakness in the PC market.

But the biggest factor of all is probably the socio-political turmoil currently underway in Arabic nations. The big one right now is Libya, but the precedent set by Tunisia and Egypt seems to have got citizens agitated in the majority of the Arab world. Markets don't like uncertainty, especially in oil-producing countries.


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The ARM drop is likely attributed to some of the directors offloading a shed load of shares: