Asian tech and chip-related stocks took a hit on Thursday following the announcement of Nvidia’s second-quarter results. Companies with direct links to the U.S. tech giant, such as South Korean chipmakers SK Hynix and Samsung Electronics, experienced significant losses. SK Hynix, a manufacturer of high bandwidth memory chips used in AI applications for Nvidia, saw shares plummet by as much as 6.74%. Similarly, Samsung Electronics, the highest weighted stock on South Korea’s Kospi index, fell by 3.8%. While the extent of Samsung’s supplier relationship with Nvidia is not fully known, the company is rumored to be manufacturing HBM chips for some Nvidia products.
The impact of Nvidia’s second-quarter results extended to other tech stocks in the region, albeit to a smaller extent. Japanese semiconductor-related stocks like Renesas, Advantest, and Tokyo Electron saw declines of up to 3.6%, 3.2%, and 3.49% respectively. Chinese chipmakers listed in Hong Kong also experienced losses, despite having little connection to the Nvidia value chain. Partially state-owned SMIC lost about 1.4%, while Hua Hong Semiconductor fell by 1.66%.
Although Nvidia beat quarterly revenue and earnings per share estimates, the decline in shares could be attributed to concerns about the company’s growth in the current quarter. Luke Rahbari, CEO of Equity Armor Investments, noted that while the results were positive, some investors may fear that Nvidia’s impressive growth streak might be slowing down. Rahbari, however, remains optimistic about the company’s future, highlighting Nvidia’s dominant position in the industry.
Nvidia’s gross margin slipped to 75.1% from 78.4% in the previous quarter, and its annual gross margin forecast fell below analysts’ estimates. Despite this, Mark Lushcini, chief investment strategist at Janney Montgomery Scott, referred to the decline in Nvidia shares as a “rounding error,” considering the significant rise in the company’s stock price throughout the year. He mentioned that while Nvidia’s growth rate has slowed down in the past four quarters, the company is still performing well.
The volatile nature of the stock market is evident in the reactions to Nvidia’s second-quarter results. Investors are constantly monitoring key players in the tech industry and responding swiftly to any news that may impact their investments. While chip-related stocks in Asia may have experienced a temporary setback, the long-term prospects of companies like Nvidia remain strong. It is essential for investors to stay informed and evaluate market trends carefully to make informed decisions in an ever-changing financial landscape.
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