Asian chipmaking stocks took a hit on Thursday, following the disappointing performance of market leader Nvidia. The chipmaker’s guidance on revenue and margins fell short of expectations, sparking concerns within the AI trade industry.
- Nvidia’s Dismal Outlook:
- Despite an earnings beat and a $50 billion buyback, Nvidia’s stock plummeted by as much as 8.5% after revealing lackluster projections for current quarter revenue and gross margin.
- CEO Jensen Huang confirmed production challenges with Blackwell, the company’s most advanced line of AI chips.
- Ripple Effect in Asia:
- SK Hynix Inc, a major supplier of memory chips to Nvidia, saw a sharp decline of 5.6%, even with the launch of a new generation of power-efficient memory chips.
- Samsung Electronics Co Ltd, another potential memory chip supplier to Nvidia, dropped by 2.8%.
- Taiwan’s TSMC, a key chipmaker and Nvidia supplier, saw a 2.4% decrease in share value.
- Broader Tech Sector Retreat:
- Nvidia’s disappointing outlook triggered broader concerns within the technology sector, especially surrounding the profitability of AI investments in the long term.
- Asian tech giants like Baidu Inc, Alibaba, Tencent Holdings Ltd, and SoftBank Group Corp faced losses ranging from 1% to 3%, all of which are actively involved in AI initiatives.
The underperformance of Nvidia has cast a shadow of doubt over the future of the AI trade. As tech companies grapple with rising costs and subdued returns from AI investments, investors are reevaluating their positions within the industry. The impact of Nvidia’s projections is felt not only within the chipmaking realm but also across the broader tech landscape.
In conclusion, while the market may experience fluctuations due to individual company performances, it is essential for investors to remain vigilant and adapt to the changing dynamics of the tech industry. Keeping a watchful eye on developments in chipmaking and AI sectors will be crucial for making informed investment decisions in the future.
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