The tech and chip-related stocks in Asia experienced a downward trend following the release of Nvidia’s second-quarter results. Companies with direct connections to the U.S. tech giant, such as SK Hynix and Samsung Electronics, were hit the hardest. SK Hynix, a manufacturer of high bandwidth memory chips used in AI applications for Nvidia, saw its shares drop by as much as 6.74%. Similarly, Samsung Electronics, a key player on South Korea’s benchmark stock index, Kospi, witnessed a decrease of up to 3.8%.
While the exact extent of Samsung’s supplier relationship with Nvidia remains uncertain, it is known that the company is involved in manufacturing HBM chips for some Nvidia products. Other direct suppliers to Nvidia, such as Taiwan Semiconductor Manufacturing Company and Hon Hai Precision Industry (Foxconn), also experienced losses of up to 2.8% and 2.96%, respectively. This demonstrates the ripple effect that Nvidia’s performance can have on its supply chain partners.
The impact of Nvidia’s earnings report extended beyond direct suppliers to other tech stocks in the region. Japanese semiconductor-related companies like Renesas, Advantest, and Tokyo Electron faced declines of up to 3.2%, 3.6%, and 3.49%, respectively. Chinese chipmakers listed in Hong Kong, despite being less connected to Nvidia, also saw their shares fall. SMIC, a partially state-owned company, saw a decrease of about 1.4%, while Hua Hong Semiconductor experienced a 1.66% drop.
Although Nvidia exceeded quarterly revenue and earnings per share estimates, the stock market’s response suggests concerns about the company’s future growth. Analysts, including Luke Rahbari from Equity Armor Investments, noted that while Nvidia’s results were strong, there might be some apprehension about sustaining past performance levels. This sentiment could explain the dip in share prices following the earnings report.
Despite the market reaction, some analysts remain optimistic about Nvidia’s long-term prospects. Mark Lushcini, chief investment strategist at Janney Montgomery Scott, described the decline in Nvidia shares as a minor setback, considering the substantial growth the company has experienced this year. He highlighted Nvidia’s dominant position in the industry and emphasized the company’s overall positive trajectory, even amid a slightly slower pace of growth in recent quarters.
The impact of Nvidia’s earnings report on tech stocks in Asia underscores the interconnected nature of the global tech industry. While short-term market fluctuations are to be expected, it is essential to consider the broader context of each company’s position within the market. Nvidia’s performance serves as a barometer for the sector, reflecting broader trends and sentiments that can influence investor behavior across the region.