Nvidia and Chip Stocks Face Volatility Amid Economic Concerns

Nvidia, chip stocks waver after previous day's sell-off

Chip companies led by market cap leader Nvidia were set to extend losses on Wednesday after a bruising sell-off in the previous session, reflecting the growing concern on Wall Street over the stocks' lofty valuations as AI optimism cools. Nvidia fell 1.3% in early trading after Tuesday's 9.5% decline wiped out $279 billion from its market value, the biggest ever single-day decline for a U.S. company. Enthusiasm around the growth of artificial intelligence technologies has propelled much of the equity market's gains this year, lifting the valuation of chip companies to levels some investors consider inflated. Worries around a slow payoff from hefty AI investments have mounted, and Nvidia's forecast last Wednesday fell short of lofty expectations even though the company posted strong quarterly revenue growth. "The focus is now shifting to valuations in the U.S. equity market in general, and some of the tech names have pretty large premium built in," said Tai Hui, Asia chief market strategist at J.P. Morgan Asset Management in Hong Kong. Since peaking on June 18, Nvidia's shares have lost roughly 20% of their value. Its forward price-to-earnings ratio now sits just below 30, representing a decline in its valuation. The stock, however, is up more than 650% since the start of 2023. "The whole AI development...is very promising. It's just the question of ... how are companies going to monetise all this development, how do we justify all this capex that is going in right now? Investors are just waiting for that answer." Other chip stocks, including Arm Holdings, Broadcom, Applied Materials and U.S.-listed shares of Dutch chip equipment maker ASML were down between 1% and 4% on Wednesday in early trading. Intel slipped 1.5%. Reuters reported earlier on Wednesday the company's contract manufacturing business suffered a setback after tests with chipmaker Broadcom failed. Nvidia shares are also taking a hit after Bloomberg News reported the U.S. Department of Justice sent a subpoena to the company, deepening its probe into the AI heavyweight's antitrust practices. Analysts have warned that regulatory scrutiny into Nvidia could step up further. The company last week disclosed requests for information from U.S. and South Korean regulators. "Nvidia is not only the biggest player in the AI chips market, but it is also invested in a large number of other AI companies which means its fingers are in multiple pies," said Dan Coatsworth, investment analyst at AJ Bell. "Regulators might want to know if it is giving preferential treatment to these investee companies or to customers who exclusively use its chips." Rival Advanced Micro Devices climbed more than 2% after the company late on Tuesday named former Nvidia executive Keith Strier as its senior vice president of global AI markets.

Nvidia, chip stocks waver after previous day's sell-off

Chip companies led by market cap leader Nvidia were set to extend losses on Wednesday after a bruising sell-off in the previous session, reflecting the growing concern on Wall Street over the stocks' lofty valuations as AI optimism cools.Chip companies led by market cap leader Nvidia were set to extend losses on Wednesday after a bruising sell-off in the previous session, reflecting the growing concern on Wall Street over the stocks' lofty valuations as AI optimism cools. Nvidia fell 1.3% in early trading after Tuesday's 9.5% decline wiped out $279 billion from its market value, the biggest ever single-day decline for a U.S. company. Enthusiasm around the growth of artificial intelligence technologies has propelled much of the equity market's gains this year, lifting the valuation of chip companies to levels some investors consider inflated. Worries around a slow payoff from hefty AI investments have mounted, and Nvidia's forecast last Wednesday fell short of lofty expectations even though the company posted strong quarterly revenue growth. "The focus is now shifting to valuations in the U.S. equity market in general, and some of the tech names have pretty large premium built in," said Tai Hui, Asia chief market strategist at J.P. Morgan Asset Management in Hong Kong. Since peaking on June 18, Nvidia's shares have lost roughly 20% of their value. Its forward price-to-earnings ratio now sits just below 30, representing a decline in its valuation. The stock, however, is up more than 650% since the start of 2023. "The whole AI development...is very promising. It's just the question of ... how are companies going to monetise all this development, how do we justify all this capex that is going in right now? Investors are just waiting for that answer." Other chip stocks, including Arm Holdings, Broadcom, Applied Materials and U.S.-listed shares of Dutch chip equipment maker ASML were down between 1% and 4% on Wednesday in early trading. Intel slipped 1.5%. Reuters reported earlier on Wednesday the company's contract manufacturing business suffered a setback after tests with chipmaker Broadcom failed. Nvidia shares are also taking a hit after Bloomberg News reported the U.S. Department of Justice sent a subpoena to the company, deepening its probe into the AI heavyweight's antitrust practices. Analysts have warned that regulatory scrutiny into Nvidia could step up further. The company last week disclosed requests for information from U.S. and South Korean regulators. "Nvidia is not only the biggest player in the AI chips market, but it is also invested in a large number of other AI companies which means its fingers are in multiple pies," said Dan Coatsworth, investment analyst at AJ Bell. "Regulators might want to know if it is giving preferential treatment to these investee companies or to customers who exclusively use its chips." Rival Advanced Micro Devices climbed more than 2% after the company late on Tuesday named former Nvidia executive Keith Strier as its senior vice president of global AI markets.

Nvidia, chip stocks waver after previous day's sell-off

(Reuters) - Chip companies led by market cap leader Nvidia were set to extend losses on Wednesday after a bruising sell-off in the previous session, reflecting the growing concern on Wall Street over the stocks' lofty valuations as AI optimism cools. Nvidia fell 1.6% in premarket trading after Tuesday's 9.5% decline wiped out $279 billion from its market value, the biggest ever single-day decline for a U.S. company. Enthusiasm around the growth of artificial intelligence technologies has propelled much of the equity market's gains this year, lifting the valuation of chip companies to levels some investors consider inflated. Worries around a slow payoff from hefty AI investments have mounted, and Nvidia's forecast last Wednesday fell short of lofty expectations even though the company posted strong quarterly revenue growth. Other chip stocks, including Arm Holdings, Micron Technology, Qualcomm and Broadcom, were down between 0.5% and 1.5% on Wednesday in premarket action. U.S.-listed shares of TSMC, Nvidia's chip manufacturing partner, slid 1.5%. "The focus is now shifting to valuations in the U.S. equity market in general, and some of the tech names have pretty large premium built in," said Tai Hui, Asia chief market strategist at J.P. Morgan Asset Management in Hong Kong. Since peaking on June 18, Nvidia's shares have lost roughly 20% of their value. Its forward price-to-earnings ratio now sits just below 30, representing a decline in its valuation. The stock, however, is up more than 650% since the start of 2023. "The whole AI development...is very promising. It's just the question of ... how are companies going to monetise all this development, how do we justify all this capex that is going in right now? Investors are just waiting for that answer." Nvidia shares are also taking a hit after Bloomberg News reported the U.S. Department of Justice sent a subpoena to the company, deepening its probe into the AI heavyweight's antitrust practices. Analysts have warned that regulatory scrutiny into Nvidia could step up further. The company last week disclosed requests for information from U.S. and South Korean regulators. "Nvidia is not only the biggest player in the AI chips market, but it is also invested in a large number of other AI companies which means its fingers are in multiple pies," said Dan Coatsworth, investment analyst at AJ Bell. "Regulators might want to know if it is giving preferential treatment to these investee companies or to customers who exclusively use its chips." (Reporting by Deborah Sophia in Bengaluru; Editing by Arun Koyyur)

Nvidia, chip stocks waver after previous day's sell-off

Enthusiasm around the growth of artificial intelligence technologies has propelled much of the equity market's gains this year, lifting the valuation of chip companies to levels some investors consider inflated. Worries around a slow payoff from hefty AI investments have mounted, and Nvidia's forecast last Wednesday fell short of lofty expectations even though the company posted strong quarterly revenue growth. Other chip stocks, including Arm Holdings, Micron Technology, Qualcomm and Broadcom, were down between 0.5% and 1.5% on Wednesday in premarket action. U.S.-listed shares of TSMC, Nvidia's chip manufacturing partner, slid 1.5%. "The focus is now shifting to valuations in the U.S. equity market in general, and some of the tech names have pretty large premium built in," said Tai Hui, Asia chief market strategist at J.P. Morgan Asset Management in Hong Kong. Since peaking on June 18, Nvidia's shares have lost roughly 20% of their value. Its forward price-to-earnings ratio now sits just below 30, representing a decline in its valuation. The stock, however, is up more than 650% since the start of 2023. "The whole AI development...is very promising. It's just the question of ... how are companies going to monetise all this development, how do we justify all this capex that is going in right now? Investors are just waiting for that answer." Nvidia shares are also taking a hit after Bloomberg News reported the U.S. Department of Justice sent a subpoena to the company, deepening its probe into the AI heavyweight's antitrust practices. Analysts have warned that regulatory scrutiny into Nvidia could step up further. The company last week disclosed requests for information from U.S. and South Korean regulators. "Nvidia is not only the biggest player in the AI chips market, but it is also invested in a large number of other AI companies which means its fingers are in multiple pies," said Dan Coatsworth, investment analyst at AJ Bell. "Regulators might want to know if it is giving preferential treatment to these investee companies or to customers who exclusively use its chips." (Reporting by Deborah Sophia in Bengaluru; Editing by Arun Koyyur)

Asian Chip Stocks Stumble as Recession Fears Resurface, Nvidia Slides

Asian chip stocks took a hit on Wednesday as markets were unnerved by artificial-intelligence chip giant Nvidia's slump overnight and renewed fears of an economic slowdown. Shares of Nvidia slid 9.5% on Wall Street on Tuesday amid a broader market selloff, erasing $278.9 billion from the company's market value. That was the biggest one-day market cap decline on record for any U.S. company, according to Dow Jones Market Data. The drop came after data published Tuesday showed continued weakness in demand for U.S. factories, resurfacing concerns about the health of the U.S. economy and the risk of a spillover onto the global economy. Asian stocks that form part of Nvidia's global value chain stumbled Wednesday, with Taiwan Semiconductor Manufacturing--the world's largest chip foundry and Nvidia's biggest contract manufacturer--shedding 4.7% in Taipei trade. Foxconn Technology Group, which builds AI servers for the U.S. tech giant, was 2.7% lower. The two index heavyweight sent Taiwan's Taiex benchmark down 3.9%. In South Korea, shares of SK Hynix, a main supplier of high-bandwidth-memory products for Nvidia's AI accelerators, lost 7.6% in morning trade, underperforming the local benchmark Kospi, which was down 2.9%. Samsung Electronics, the world's top memory-chip maker, was down 3.3%. Samsung is viewed as lagging behind SK Hynix in its position in the global HBM supply chain for Nvidia. In Tokyo, semiconductor-equipment maker Tokyo Electron was off by 7.6% and Advantest, which makes chip-testing tools, fell 6.9%. The Nikkei index was down over 3%. Losses among Chinese chip giants listed in Hong Kong were more muted than elsewhere as they are less exposed to advanced AI chip technology. Semiconductor Manufacturing International Corp. and Hua Hong Semiconductor were down 1.7% and 2.15% in Hong Kong, respectively. Asian chip stocks' "outperformance across the region on the AI hype since the start of the year may lead prices to be more sensitive to any sell-off with a magnified effect," IG market strategist Yeap Jun Rong said in a note. Investors will now shift attention to Friday's monthly jobs report in the U.S., a key dataset that could influence expectations around the pace and scale of the Federal Reserve's interest-rate cuts. Concerns that the AI industry boom is slowing may also be in play, analysts say. Morningstar analyst Phelix Lee said markets may be interpreting remarks from Nvidia's chief executive in a media report as signaling that demand for its AI equipment has peaked. While still expecting above-average growth from AI demand for most of Nvidia's Asian beneficiaries, "revenues [of Asian chip companies] are unlikely to redouble in 2025 or 2026 owing to high base." Despite the Nvidia selloff, Wedbush analysts remain bullish on the stock, calling it "the new oil and gold in the IT landscape". Tech spending on AI has only just started rippling across the sector, they said. "The stage is set for tech stocks to move higher into year-end and 2025," as the Fed kicks off its rate-cutting cycle and a "soft landing" for the U.S. economy remains on track, the analysts said in a note.

Asian chip stocks fall after Nvidia sell-off on Wall Street overnight

Asia's semiconductor and associated stocks slipped Wednesday morning, following a steep plunge in Nvidia's share price in the U.S. overnight. In the U.S., chipmaker Nvidia plunged more than 9% in regular trading, leading semiconductor stocks lower amid a sell-off on Wall Street. Economic data published Tuesday resurfaced jitters about the health of the U.S. economy. Nvidia shares continued sliding in post-market trading Tuesday, falling 2%, after Bloomberg reported that the company received a subpoena from the Department of Justice as part of an antitrust investigation. Nvidia's value chain extends to South Korea, namely, memory chip maker SK Hynix and conglomerate Samsung Electronics. Samsung shares slid 2.6%, while SK Hynix fell more than 6%, dragging the wider Kospi index down 2.5%. The small-cap Kosdaq fell 3%. SK Hynix provides high bandwidth memory chips to Nvidia, which are used in AI chipsets. Contract chip manufacturer Taiwan Semiconductor Manufacturing Company declined 4.3%. TSMC manufactures Nvidia's high-performance graphics processing units which power large language models -- machine learning programs that can recognize and generate text. Taiwan's Hon Hai Precision Industry -- known internationally as Foxconn -- lost 5%. It has a strategic partnership with Nvidia.

Asian chip stocks like TSMC and SK Hynix plunge after Nvidia's record drop in market value

Asian semiconductor-related stocks tumbled, putting regional benchmarks on course for their worst drops in a month amid renewed concerns of overheating in the artificial intelligence rally. The MSCI Asia Pacific Index fell as much as 2.2%, the most since the Aug. 5 panic selloff. Taiwan's Taiex tumbled as much as 5.3% while Japan's Topix slid 3.4% and Korea's Kospi dropped 3%. The declines came after leading global AI chipmaker Nvidia Corp. shed a daily record of $278.9 billion in market value Tuesday. The latest concerns were sparked by analyst comments that AI stocks had gotten too far ahead of what the technology can actually deliver in terms of profits. The risk-off mood was further stoked by worry over the U.S. economy after a closely watched U.S. manufacturing gauge missed estimates. "Now investors are starting to question if the return on investment is coming through," Randy Abrams, head of Taiwan research at UBS Global Asset Management, said in a Bloomberg TV interview. "They are a bit nervous as some of the macro data is not as strong." Despite rising volatility, most investors cautioned against taking Wednesday's slide as the start of another market meltdown, recommending dip-buying of selected names, as AI spending is expected to remain strong. "It feels a bit like a storm in a tea cup after August," said Andrew Jackson, a strategist at Ortus Advisors Pte. "It feels like we are not getting a repeat of the intense panic selling like last time." Chip stocks were the biggest drags on MSCI's broadest Asian equity gauge Wednesday. Among key Nvidia suppliers, foundry Taiwan Semiconductor Manufacturing Co. slid as much as 5.5%. Japanese testing-equipment maker Advantest Corp. plunged as much as 10%, while Korean memory maker SK Hynix Inc. tumbled 9.2%. More broadly, investors are monitoring conflicting cues to kick off September, a historically volatile month for stocks. While China's economic funk continues to weigh on sentiment, there are also expectations that the Federal Reserve will begin cutting interest rates in its upcoming meeting, providing a boost for equities. Some also maintain optimism on the promise of AI, with companies around the world still planning to spend billions as they incorporate the new technology. "The concern for a peak in demand for AI is exaggerated in our view," said Jung In Yun, chief executive officer at Fibonacci Asset Management Global Pte. "We will likely see demand for AI and its supporting infrastructure remaining robust through the first half of next year." In addition, valuations are seen as somewhat less of an issue in Asia, where AI stocks have lagged the gains in some of the biggest global names. A Bloomberg gauge of Asian chipmakers is trading at about 13 times forward estimated earnings, down from over 18 times earlier this year and trailing the nearly 24 times level of an index of major U.S.-listed peers.

Tech Slides on Chip Demand Fears - Tech Roundup

Shares of technology companies plunged amid fears about chip demand. Nvidia plunged by almost 10%, its biggest retreat since April, amid signs of a glut in semicondocturs. Total semiconductor sales fell last month as tech companies neglected to buy memory chips, which saw a 31% month-over-month drop in sales in July, according to analysts at brokerage UBS. Among other chip makers, Advanced Micro Devices, Intel and Broadcom also sold off. Separately, in an after-the-bell report AMD said it had appointed Keith Strier, Nvidia's vice president of worldwide AI initiatives, to be its senior vice president of global AI markets, showing how intense the AI arms race remains. Nvida's selloff came "even though things looked pretty good [in Nvidia's earnings], and probably still looking pretty good," said J.D. Joyce, president of Houston financial advisory Joyce Wealth Management. The second biggest event in AI earnings season after last week's Nvidia earnings statement may be this week's Broadcom report, Joyce said. "Depending on what they have to say, that could probably influence AI in general. And AI in general seems to be influencing the market in general," said Joyce. Another AI-associated company, Super Micro Computer saw shares bounce after upbeat commentary from the server marker's chief executive officer mitigated fears that shook the stock last month.

Asian Stocks Plunge as AI Valuation Worry Hurts Chipmakers

(Bloomberg) -- Asian semiconductor-related stocks tumbled, putting regional benchmarks on course for their worst drop in a month amid renewed concerns of overheating in the artificial intelligence rally. The MSCI Asia Pacific Index fell as much as 2.7%, the most since the panic selloff on Aug. 5. Taiwan's Taiex tumbled 4.5% while Japan's Topix slid 3.7% and Korea's Kospi dropped 3.2%. The declines came after leading global AI chipmaker Nvidia Corp. shed a daily record of $278.9 billion in market value Tuesday. The latest concerns were sparked by analyst comments that AI stocks had gotten too far ahead of what the technology can actually deliver in terms of profits. The risk-off mood was further stoked by worry over the US economy after a closely watched US manufacturing gauge missed estimates. "Now investors are starting to question if the return on investment is coming through," Randy Abrams, head of Taiwan research at UBS Global Asset Management, said in a Bloomberg TV interview. "They are a bit nervous as some of the macro data is not as strong." Despite rising volatility, most investors cautioned against taking Wednesday's slide as the start of another market meltdown, recommending dip-buying of selected names, as AI spending is expected to remain strong. "It feels a bit like a storm in a tea cup after August," said Andrew Jackson, a strategist at Ortus Advisors Pte. "It feels like we are not getting a repeat of the intense panic selling like last time." Chip stocks were the biggest drags on MSCI's broadest Asian equity gauge Wednesday. Among key Nvidia suppliers, foundry Taiwan Semiconductor Manufacturing Co. slid 5.4%. Japanese testing-equipment maker Advantest Corp. plunged 7.7%, while Korean memory maker SK Hynix Inc. tumbled 8%. More broadly, investors are monitoring conflicting cues to kick off September, a historically volatile month for stocks. While China's economic funk continues to weigh on sentiment, there are also expectations that the Federal Reserve will begin cutting interest rates in its upcoming meeting, providing a boost for equities. Some also maintain optimism on the promise of AI, with companies around the world still planning to spend billions as they incorporate the new technology. "The concern for a peak in demand for AI is exaggerated in our view," said Jung In Yun, chief executive officer at Fibonacci Asset Management Global Pte. "We will likely see demand for AI and its supporting infrastructure remaining robust through the first half of next year." In addition, valuations are seen as somewhat less of an issue in Asia, where AI stocks have lagged the gains in some of the biggest global names. A Bloomberg gauge of Asian chipmakers is trading at about 13 times forward estimated earnings, down from over 18 times earlier this year and trailing the nearly 24 times level of an index of major US-listed peers. This story was produced with the assistance of Bloomberg Automation. --With assistance from Abhishek Vishnoi, Annabelle Droulers and Ashutosh Joshi. (Updates index levels. An earlier version of this story was corrected to say the date of the previous selloff was Aug. 5)