Following Nvidia’s second-quarter results, tech and chip-related stocks in Asia experienced a significant decline. Companies with direct ties to Nvidia, such as South Korean chipmakers SK Hynix and Samsung Electronics, were hit the hardest. SK Hynix, known for manufacturing high bandwidth memory chips for Nvidia, saw shares plummet by as much as 6.74%. Similarly, Samsung Electronics, a key player in South Korea’s stock market, experienced a drop of 3.8%. The extent of Samsung’s supplier relationship with Nvidia remains somewhat unknown, but it is believed that the company produces HBM chips for certain Nvidia products.
The negative impact of Nvidia’s results was not limited to direct suppliers. Japanese semiconductor-related stocks like Renesas, Advantest, and Tokyo Electron also took a hit, with losses ranging from 3.2% to 3.6%. Even Chinese chipmakers listed in Hong Kong saw a decline, despite not being directly connected to Nvidia. SMIC, a partially state-owned company, experienced a 1.4% drop, while Hua Hong Semiconductor fell by 1.66%. The overall sentiment was influenced by concerns that Nvidia might not sustain its previous explosive growth rate in the current quarter.
Luke Rahbari, CEO of Equity Armor Investments, acknowledged Nvidia’s strong quarterly results but expressed apprehensions about its future growth trajectory. While Nvidia has consistently exceeded analysts’ expectations in the past, there are concerns that the company’s rapid expansion may be slowing down. However, Rahbari remains optimistic about Nvidia’s market position, describing it as unparalleled in the industry. Despite reporting positive earnings, Nvidia’s gross margin experienced a slight decline, raising further questions about the company’s long-term profitability.
Mark Lushcini, chief investment strategist at Janney Montgomery Scott, downplayed the decline in Nvidia shares, attributing it to a minor setback in light of the company’s overall performance. Nvidia’s stock value has surged significantly over the year, having gained around 150%. Lushcini acknowledged Nvidia’s impressive growth rate but noted that it had been gradually slowing down over the past four quarters. With an annual gross margin forecast lower than analysts’ estimates, Nvidia faces challenges in maintaining its previous market dominance and profitability.
The repercussions of Nvidia’s second-quarter results have reverberated across Asian tech and chip-related stocks, affecting both direct suppliers and unrelated companies. The mixed reactions from market analysts reflect the uncertainty surrounding Nvidia’s future growth prospects and market positioning. As Nvidia navigates through these challenges, investors and industry observers will keenly monitor its strategic decisions and financial performance in the coming quarters.
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