The tech and chip-related stocks in Asia experienced a significant decline on Thursday after U.S. chip darling Nvidia revealed its second-quarter results. This drop was particularly noticeable in companies closely associated with Nvidia, such as South Korean chipmakers SK Hynix and Samsung Electronics. SK Hynix, which produces high bandwidth memory chips for Nvidia, witnessed a staggering 6.74% decrease in its shares. Similarly, Samsung Electronics, the most heavily weighted stock on South Korea’s benchmark stock index, Kospi, saw a decline of up to 3.8%.
The repercussions of Nvidia’s report spread to other tech stocks in the region, albeit to a lesser extent. Japanese semiconductor-related companies like Renesas, Advantest, and Tokyo Electron experienced drops of 3.2%, 3.6%, and 3.49%, respectively. Furthermore, Chinese chipmakers listed in Hong Kong also suffered losses, even though they are not directly tied to the Nvidia value chain. SMIC, which is partially state-owned, saw a 1.4% decrease, while Hua Hong Semiconductor fell by 1.66%.
While Nvidia surpassed quarterly revenue and earnings expectations, the decline in its share prices raised concerns about the company’s growth prospects for the current quarter. Luke Rahbari, the CEO of Equity Armor Investments, mentioned that Nvidia had consistently exceeded analysts’ expectations in previous quarters, leading to high anticipation. However, the slight dip in Nvidia’s gross margin from 78.4% to 75.1% and an annual gross margin forecast below analysts’ estimates impacted market sentiment. Despite this, Rahbari expressed confidence in Nvidia’s dominant position in the industry.
Mark Lushcini, the chief investment strategist at financial advisory firm Janney Montgomery Scott, characterized the decline in Nvidia’s shares as a “rounding error” due to the company’s substantial growth throughout the year. While Nvidia’s stock prices have surged by approximately 150% year-to-date, Lushcini acknowledged a slowdown in the company’s growth rate over the past four quarters. Nevertheless, he emphasized Nvidia’s rapid expansion and positioning within the industry.
Nvidia’s second-quarter results had a significant impact on tech and chip-related stocks in Asia, with companies like SK Hynix, Samsung Electronics, and various semiconductor manufacturers experiencing sharp declines. While the overall market sentiment was influenced by Nvidia’s report, experts like Luke Rahbari and Mark Lushcini remain optimistic about the company’s long-term prospects. It is essential for investors to closely monitor Nvidia’s performance in the upcoming quarters to assess its growth trajectory and market stability.
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