Asian Chip Stocks Tumble as Nvidia's Outlook Dampens AI Enthusiasm
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Asian Chip Stocks Decline as Nvidia's Outlook Damps AI Frenzy
Asian semiconductor stocks slipped as a less-than-outstanding outlook from key chipmaker Nvidia Corp. chilled investor sentiment on the artificial intelligence trade. Among Nvidia suppliers, shares of Korean memory maker SK Hynix Inc. dropped as much as 6.8% while those of Japanese tester maker Advantest Corp. fell 3.6%. The Bloomberg Asia Pacific Semiconductors Index slid 1.6%. American depository receipts of leading foundry Taiwan Semiconductor Manufacturing Co. shed more than 4% in late trading.
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Asian Chip Stocks Decline as Nvidia's Outlook Damps AI Frenzy
(Bloomberg) -- Asian semiconductor stocks slipped as a less-than-outstanding outlook from key chipmaker Nvidia Corp. chilled investor sentiment on the artificial intelligence trade. Among Nvidia suppliers, shares of Korean memory maker SK Hynix Inc. dropped as much as 6.8% while those of Japanese tester maker Advantest Corp. fell 3.6%. The Bloomberg Asia Pacific Semiconductors Index slid 1.6%. American depository receipts of leading foundry Taiwan Semiconductor Manufacturing Co. shed more than 4% in late trading. "Nvidia had a good result yet share price was down on the back of big expectations for next year," said Jun Bei Liu, a portfolio manager at Sydney-based Tribeca Investment Partners Pty Ltd. The cooling off in the shares after their strong performance this year "provides buying opportunities as long term structural growth remains intact," she said. Nvidia's shares fell more than 8% in late US trading after giving a revenue forecast that missed the highest analyst estimates and flagging production snags with its new Blackwell chips. The announcements may deepen concerns of overheating of the AI rally that sparked a recent selloff and rotation into less-loved areas of the equity market.
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Tech stocks in Asia fall amid broad declines in the region after Nvidia results
Samsung Electronics' fourth-generation high bandwidth memory or HBM3 chips have been cleared by Nvidia for use in its processors for the first time, three people briefed on the matter said. Tech and chip-related stocks in Asia fell on Thursday, after U.S. chip darling Nvidia reported its second-quarter results overnight, amid a broader decline in the region's key markets. Losses were most pronounced in companies with direct links to the U.S. tech giant, such as South Korean chipmakers SK Hynix and Samsung Electronics. SK Hynix, which manufactures high bandwidth memory chips -- used in AI applications -- for Nvidia, saw shares slump as much as 6.74%. Samsung Electronics, the highest weighted stock on the South Korea's benchmark stock index, Kospi, fell as much as 3.8%. While the extent of Samsung's supplier relationship with Nvidia is not fully known, the company is expected to be manufacturing HBM chips for some Nvidia products, according to Reuters. Other direct suppliers to Nvidia such as Taiwan Semiconductor Manufacturing Company and Hon Hai Precision Industry -- known internationally as Foxconn -- saw losses of as much as 2.8% and 2.96%, respectively.
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Asian semiconductor stocks experienced a significant decline following Nvidia's cautious outlook, signaling a potential cooling in the AI-driven tech rally. The ripple effect was felt across major Asian markets, raising questions about the sustainability of the AI boom.
Nvidia's Outlook Triggers Asian Tech Selloff
Asian chip stocks faced a sharp decline on August 29, 2024, as Nvidia Corp.'s cautious outlook dampened enthusiasm in the artificial intelligence (AI) sector. Nvidia, a leading manufacturer of graphics processors essential for AI applications, provided a sales forecast that fell short of the most optimistic projections, causing a ripple effect across Asian markets
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.Impact on Key Asian Chip Manufacturers
The selloff was particularly pronounced among major Asian semiconductor companies. Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, saw its shares drop by 2.5%. Samsung Electronics Co., another key player in the chip industry, experienced a 2.1% decline. SK Hynix Inc., a major memory chip producer, faced an even steeper fall of 3.9%
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.Broader Market Implications
The tech-heavy Taiwan Stock Exchange Weighted Index (TWSE) fell by 1.9%, while South Korea's Kospi index declined by 1.2%. These movements reflected the broader impact of Nvidia's outlook on investor sentiment in the region. The event raised questions about the sustainability of the AI-driven rally that had been propelling tech stocks to new heights
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.Nvidia's Performance and Market Reaction
Despite the market's negative reaction, it's worth noting that Nvidia's actual performance remained strong. The company reported a 170% year-over-year increase in revenue for the second quarter, reaching $13.51 billion. However, its third-quarter revenue forecast of $16 billion, while impressive, fell short of some analysts' expectations, leading to a 3% drop in Nvidia's stock price in after-hours trading
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AI Boom Sustainability in Question
The market's reaction to Nvidia's outlook has sparked discussions about the longevity of the AI boom. While the technology continues to advance rapidly, investors are becoming more cautious about valuations and growth expectations in the sector. This event may mark a turning point in how the market perceives AI-related stocks, potentially leading to more realistic assessments of their growth potential
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.Global Tech Sector Implications
The ripple effect of Nvidia's outlook extended beyond Asia, affecting tech stocks globally. In the United States, other chip manufacturers and AI-related companies also experienced stock price declines. This global reaction underscores the interconnected nature of the tech industry and the significant influence that key players like Nvidia have on market sentiment
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