Global chip stocks fell on Thursday after US chip darling NVIDIA The figures for the second fiscal quarter exceeded analysts' expectations but upset traders who had hoped for higher growth rates.
While Nvidia reported better-than-expected results, with revenues up 122 percent year-over-year, this still represents a slowdown after three consecutive quarters of annual growth rates of over 200 percent.
In Asia, the South Korean chip manufacturers SK Hynix and Samsung Electronics — each suppliers to Nvidia — recorded the most important losses amongst Asian chip manufacturers.
SK Hynix, which makes high-bandwidth memory chips for Nvidia utilized in AI applications, closed down 5.4%.
Samsung Electronics, the best weighted stock within the South Korean benchmark Stock index, Kospi, fell by over 3%.
Although the extent of the supplier relationship between Samsung and Nvidia just isn’t fully known, the corporate is predicted to fabricate HBM chips for some Nvidia productsin accordance with Reuters.
Other direct suppliers of Nvidia akin to Taiwanese semiconductor manufacturing company And Hon Hai Precision Industry – known internationally as Foxconn – recorded losses of about 2% and 1% respectively.
In Japan, a semiconductor manufacturer Tokyo Electron fell by 2%.
Conversely, not all chip manufacturers were within the red on Thursday. The Chinese state-supported chip manufacturer SMIC rose nearly 1%, while Hua Hong Semiconductor rose nearly 3%.
This got here amid a broader rise in Hong Kong's Hang Seng Index, which rose 0.5 percent on Thursday.
In the US, Nvidia's rival AMD, which also benefited significantly from the synthetic intelligence boom, lost about 0.5 percent in pre-market US trading.
SoftBank-backed chip designer arm and chipmaker Broadcom also fell. Qualcomm, then again, rose by a fraction of a percent.
Super Micro, meanwhile, lost over 4% in premarket trading, adding to its 19% losses in Wednesday's trading session.
The reason for this was a delay in the corporate's annual report after a report by short seller Hindenberg Research allegedly found “new evidence of accounting manipulation” at the corporate.
Super Micro declined to comment on Hindenburg's report, saying the corporate needs more time to evaluate “the design and operating effectiveness of its internal controls over financial reporting as of June 30, 2024.”
In Europe, shares of Dutch chipmaker BE Semiconductor and its country's ASML – a serious semiconductor equipment maker – each rose 2%.
Dutch chipmakers ASMI and STMicroelectronics rose 3% and a couple of.5%, respectively, while German company Infineon rose nearly 2%.
Out-of-control train slows down
Although Nvidia beat revenue and earnings per share estimates for the quarter, the share price decline could have been triggered by fears that the corporate may not find a way to deliver explosive growth in the present quarter, Luke Rahbari, CEO of Equity Armor Investments, told CNBC's “Squawk Box Asia.”
Rahbari said the outcomes were “really good,” but in addition noted that “Nvidia has beaten analyst expectations in so many quarters… People [are] maybe they think the runaway train will slow down a little.”
He remains optimistic about the company, stressing: “In my opinion, no other company on the earth has such a dominant position within the industry as Nvidia.”
However, according to StreetAccount, Nvidia's gross margin fell to 75.1 percent from 78.4 percent in the prior period, while the annual gross margin forecast was in the “mid-70 percent range,” below analysts' estimate of 76.4 percent.
In an interview with CNBC's “Squawk Box Asia,” Mark Lushcini, chief investment strategist at financial advisory firm Janney Montgomery Scott, called the decline in Nvidia shares a “rounding error,” citing Nvidia's sharp rise this year. Shares are up about 150% year-to-date.
He noted: “The company is growing quickly, however the pace of growth has been slowing for 4 quarters now. For an organization trading at 40 to 50 times forward earnings, that's a high demand hurdle to beat relative to expectations.”
Ben Barringer, global technology, media and telecommunications analyst and managing director at Quilter Cheviot, said that while Nvidia has signaled strong demand for its high-performance Hopper and Blackwell computer chips, the stock's rise may have been overdone.
“This company is on a trajectory for strong growth, and perhaps we'll get good growth, but not great growth,” Barringer told CNBC's “Squawk Box Europe” on Thursday.
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