Asian chipmaking stocks sink tracking Nvidia losses

Investing.com– Asian chipmaking stocks fell on Thursday, tracking overnight losses in market darling Nvidia after the chipmaker’s guidance on revenue and margins underwhelmed, raising concerns over the AI trade. 

NVIDIA Corporation (NASDAQ:) fell as much as 8.5% in after-hours trade as an underwhelming outlook on current quarter revenue and gross margin largely eclipsed an earnings beat and a $50 billion buyback from the chipmaker.

CEO Jensen Huang also confirmed earlier reports that the firm was facing difficulties in producing its most advanced line of artificial intelligence chips, called Blackwell. 

The news sparked steep losses in Nvidia’s stock, with losses spilling over into Asia, where several chipmakers have direct exposure to the AI giant.

South Korea’s SK Hynix Inc (KS:) was the worst performer of the lot, dropping 5.6% even as it unveiled a new generation of memory chips aimed at reducing power requirements. SK Hynix is a key supplier of advanced memory chips to Nvidia.

Peer Samsung Electronics Co Ltd (KS:), which is also vying to supply Nvidia with memory chips, fell 2.8%. 

Taiwan’s TSMC (TW:) (NYSE:)- the world’s biggest chipmaker by foundry capabilities and a major Nvidia supplier- fell 2.4% in Taipei trade, after its U.S. shares sank over 3%. Hon Hai Precision Industry, also known as Foxconn (TW:), another major Nvidia supplier, fell more than 2%.

Japanese semiconductor testing equipment maker Advantest Corp. (TYO:) lost 0.9%, while Tokyo Electron Ltd. (TYO:), the country’s biggest chipmaker, fell 1.5%. 

In China, Semiconductor Manufacturing International Corp (HK:)- the country’s biggest chipmaker and a local competitor for Nvidia, fell 1.3%. 

Broader tech retreats as AI trade comes into question

Losses spilled over from chipmaking stocks and into the broader technology sector, as Nvidia’s underwhelming outlook raised questions about just how profitable the so-called “AI trade” was bound to be in the long run.

Before Nvidia, middling earnings from several of its tech peers on Wall Street had pointed to rising costs and relatively muted returns from investment in AI.

This notion weighed on broader Asian tech stocks on Thursday. China’s BAT (LON:) trio of Baidu Inc (HK:) (NASDAQ:), Alibaba (HK:) (NYSE:) and Tencent Holdings Ltd (HK:)- all three of which have ongoing AI programs- fell between 1% and 3% in Hong Kong trade.

Japan’s SoftBank Group Corp. (TYO:)- which is exposed heavily to AI through its tech investments- fell about 2%. Softbank’s unit- the British chip designing firm Arm Holdings (NASDAQ:)- had fallen sharply on Wednesday and extended its losses after Nvidia’s earnings.