Asia-Pacific Technology Stocks Tumble Amid Widespread Declines After Nvidia Earnings Announcement
Tech and semiconductor-related shares in Asia experienced a notable decline on Thursday, following a significant drop in the region subsequent to Nvidia’s second-quarter financial results. The market saw substantial losses, particularly in firms directly linked to the U.S. chip titan, including South Korean semiconductor manufacturers SK Hynix and Samsung Electronics.
SK Hynix, a producer of high bandwidth memory chips essential for AI applications and a supplier to Nvidia, witnessed a sharp decline of up to 6.74%. Meanwhile, Samsung Electronics, a significant constituent on South Korea’s Kospi stock index, suffered a decrease of as much as 3.8%.
This market downturn can be attributed to Nvidia approving the use of Samsung Electronics’ fourth-gen high bandwidth memory (HBM3) chips in their processors for the first time, as per sources familiar with the matter.
Additionally, stock prices of other Nvidia suppliers like Taiwan Semiconductor Manufacturing Company and Hon Hai Precision Industry, known as Foxconn internationally, also dipped by 2.8% and 2.96%, respectively.
Impact on Asian Tech Shares
The repercussions extended to other tech companies in the region, albeit to a lesser degree. Japanese firms related to semiconductor manufacturing, such as Renesas, Advantest, and Tokyo Electron, observed declines of 3.2%, 3.6%, and 3.49%, respectively.
Chinese semiconductor entities listed in Hong Kong faced a similar fate, with SMIC dropping approximately 1.4% and Hua Hong Semiconductor tumbling by 1.66%, despite their minimal association with Nvidia’s value chain.
Analyzing Nvidia’s Performance
While Nvidia surpassed forecasts for quarterly revenue and earnings per share, concerns over its ability to sustain rapid growth in the upcoming quarter might have triggered the stock plunge. Luke Rahbari, CEO of Equity Armor Investments, mentioned on “Squawk Box Asia” that though Nvidia’s results were commendable, investors may be cautious due to the company’s potential slowdown in growth.
Regardless of these apprehensions, the company’s standing remains strong in the industry, with Rahbari highlighting Nvidia’s dominant position compared to other players in the market.
Although Nvidia’s gross margin slightly declined in the last period, its annual forecast still fell short of analysts’ expectations. Mark Lushcini, Chief Investment Strategist at Janney Montgomery Scott, categorized the drop in Nvidia shares as a minor setback, considering the substantial increase in the company’s stock value throughout the year.
Sources: CNBC
