The impact of Nvidia’s second-quarter results was felt in Asia on Thursday, with tech and chip-related stocks experiencing a drop in value. Companies with direct ties to Nvidia, such as South Korean chipmakers SK Hynix and Samsung Electronics, were hit particularly hard. SK Hynix, a manufacturer of high bandwidth memory chips used in AI applications for Nvidia, saw its shares fall by as much as 6.74%. Meanwhile, Samsung Electronics, the highest weighted stock on South Korea’s benchmark stock index, Kospi, saw a decline of up to 3.8%.
Other companies in Nvidia’s supply chain also experienced losses in the wake of the company’s earnings report. Suppliers like Taiwan Semiconductor Manufacturing Company and Hon Hai Precision Industry, known as Foxconn, saw their shares drop by as much as 2.8% and 2.96%, respectively. The extent of Samsung’s relationship with Nvidia is not fully known, but the company is believed to manufacture HBM chips for some Nvidia products. This uncertainty may have contributed to the decline in Samsung Electronics’ stock price.
The impact of Nvidia’s results also extended to other tech stocks in the region, albeit to a lesser degree. Japanese semiconductor companies like Renesas, Advantest, and Tokyo Electron saw their shares fall by as much as 3.2%, 3.6%, and 3.49%, respectively. Chinese chipmakers listed in Hong Kong also experienced a decline, despite not having direct links to Nvidia. State-owned chipmaker SMIC saw a loss of about 1.4%, while Hua Hong Semiconductor fell by 1.66%. The overall sentiment in the tech sector was one of caution, with investors concerned about Nvidia’s ability to sustain its growth momentum.
While Nvidia’s quarterly results beat revenue and earnings per share estimates, concerns about future growth prospects may have weighed on the stock price. Luke Rahbari, CEO of Equity Armor Investments, pointed out that while the results were positive, there is a sense that Nvidia’s growth trajectory may be slowing down. However, Rahbari remains optimistic about the company’s long-term prospects, highlighting Nvidia’s dominant position in the industry. Despite a slight dip in gross margin, Nvidia’s performance continues to be strong, with shares having risen by 150% year to date.
Mark Lushcini, chief investment strategist at Janney Montgomery Scott, described the decline in Nvidia shares as a “rounding error,” attributing it to the significant gains the company has made this year. While the pace of growth may be slowing down, Nvidia remains a key player in the tech industry with strong growth potential. The fallout from Nvidia’s results serves as a reminder of the interconnected nature of the global tech market, where one company’s performance can have ripple effects across the entire sector. As investors continue to assess the implications of Nvidia’s latest earnings report, the broader tech industry in Asia and beyond will be closely watched for signs of resilience and recovery.
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