Most major chip stocks in Asia traded slightly lower on Wednesday, following an overnight decline in NVIDIA Corporation (NASDAQ:NVDA) as markets awaited further signs of an AI-fueled boom from the chipmaker’s earnings report.
Nvidia wiped out about $100 billion in market capitalization on Tuesday, while also seeing profit-taking as investors wait to see if the chipmaker’s earnings will deliver the big boost it has forecast. The earnings also likely justify Nvidia’s sharp price rise over the past year.
Nvidia will report fourth-quarter earnings after the U.S. market closes on Wednesday and is expected to post EPS of $4.58 and revenue of $20.37 billion.
Earnings expectations sent most Asian chip stocks into a tailspin on Wednesday. Japanese semiconductor testing equipment maker Advantest Corp. (TYO:6857) and TSMC (TW:2330) (NYSE:TSM)—the world’s largest contract chipmaker—fell 3.2% and 1%, respectively. Both companies are major suppliers to Nvidia, with Morgan Stanley analysts saying in a recent note that TSMC shares could be used to position ahead of Nvidia’s quarterly earnings report.
South Korean memory chipmaker SK Hynix Inc (KS:000660) – also poised to benefit from the artificial intelligence boom – rose 0.5% after briefly hitting a record high this week, while its larger rival Samsung Electronics Co. (KS:005930) fell 0.1%.
Japanese tech investment firm SoftBank Group Corp. (TYO:9984) fell 2%, following a more than 5% drop in shares of chip designer Arm Holdings (NASDAQ:ARM), which has also seen its valuation soar recently on the back of AI hype.
Tokyo Electron Ltd. (TYO:8035), Japan's most valuable chipmaker, fell 1.3%.
The hype around AI has fueled a surge in global tech stocks in recent months, as investors bet that chipmakers and chip-related companies will see higher demand thanks to the growing development of AI.
Nvidia is at the center of this boom, as it makes processors specifically geared toward running synthetic AI programs.
Most Asian chip stocks largely followed Nvidia's gains after its earnings report, which beat expectations for three of the quarters through 2023.
Elsewhere, China’s SMIC (HK:0981) – the country’s largest chipmaker – rose 4.6% in Hong Kong trading on Wednesday, after a report showed the chipmaker was among the largest to receive government funding by 2024.
Source: Investing
