Tech and chip-related stocks across Asia saw declines on Thursday, following Nvidia’s release of its second-quarter results. The drop extended across key markets in the region, with companies directly linked to the U.S. chip giant experiencing the most significant losses.
South Korean chipmakers SK Hynix and Samsung Electronics were among those hit hardest. SK Hynix, which supplies high bandwidth memory (HBM) chips for Nvidia’s AI applications, saw its shares fall by as much as 6.74%. Samsung Electronics, the largest stock on South Korea’s Kospi index, dropped by up to 3.8%. Although Samsung’s exact role as a supplier to Nvidia is not fully disclosed, Reuters suggests that it may be manufacturing HBM chips for some Nvidia products.
Other direct Nvidia suppliers, such as Taiwan Semiconductor Manufacturing Company (TSMC) and Hon Hai Precision Industry (known internationally as Foxconn), also faced losses. TSMC’s shares fell by as much as 2.8%, while Foxconn saw a decline of 2.96%.
The downturn in Nvidia-linked stocks had a ripple effect on other tech companies, albeit to a lesser degree. In Japan, semiconductor-related firms like Renesas, Advantest, and Tokyo Electron experienced drops of up to 3.2%, 3.6%, and 3.49%, respectively. Chinese chipmakers listed in Hong Kong, such as SMIC and Hua Hong Semiconductor, saw declines of 1.4% and 1.66%, even though their operations are largely unconnected to Nvidia’s value chain.
Despite Nvidia’s quarterly earnings and revenue surpassing expectations, concerns arose that the company’s explosive growth might not continue at the same pace in the current quarter. Luke Rahbari, CEO of Equity Armor Investments, suggested that Nvidia’s previous performances had consistently outpaced analyst predictions, leading to speculation that its growth might be slowing down. However, Rahbari remains optimistic about Nvidia, emphasizing its dominant industry position.
Nvidia’s gross margin dropped from 78.4% in the previous period to 75.1%, with its annual gross margin forecast of the “mid-70% range” falling short of analysts’ estimates of 76.4%, according to StreetAccount. Mark Luschini, chief investment strategist at Janney Montgomery Scott, referred to the decline in Nvidia shares as a “rounding error,” highlighting the significant gains the stock has made this year, rising around 150% year-to-date. Luschini also noted that while Nvidia continues to grow rapidly, the pace of growth has decelerated for the past four quarters, posing a challenge given the high valuation multiples on its forward earnings.
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