Asian semiconductor stocks experienced a significant decline after Nvidia's earnings report, which exceeded analysts' expectations but raised concerns among investors due to a forecast that fell short of high expectations.
Nvidia's shares dropped 2.5% in extended trading, settling at around $142.20. The company's third-quarter results showed a remarkable 94% year-over-year revenue increase, reaching $35.08 billion, surpassing the expected $33.16 billion. However, this growth marked a significant slowdown compared to previous quarters.
The sentiment surrounding Nvidia's performance had a ripple effect across Asia, impacting various semiconductor-related stocks. Advantest, a supplier of semiconductor testing equipment, saw its shares plummet by as much as 5.6%, making it the largest loser on Japan's Nikkei 225 index. Similarly, Softbank Group, which holds a stake in chip designer Arm, experienced a decline of over 1.5%. Taiwan Semiconductor Manufacturing Corp faced a drop of 1.5%, while Hon Hai Precision Industry fell by 1.9%.
Despite the recent downturn, Nvidia's financial performance remains impressive, with net income rising 109% year-over-year to $19.3 billion. The company anticipates current-quarter revenue of approximately $37.5 billion, beating analysts' expectations but indicating a year-over-year growth rate of about 70%. This figure represents a stark contrast to the staggering 265% growth recorded in the same period the previous year.
Analysts note that while growth is slowing, it is still occurring from exceptionally high levels, reflecting the ongoing demand for AI technology.
Nvidia's position as a leading player in the AI chip market has attracted attention from major tech companies. Microsoft, Alphabet, Amazon, and Meta Platforms have all committed to increasing their investments in AI-related technologies, solidifying Nvidia's role as a key beneficiary of the AI boom. The company's stock has nearly tripled in value this year, making it the most valuable publicly traded company globally. This performance underscores the strong market demand for AI capabilities and Nvidia's critical role in this evolving landscape.
Investor sentiment has been influenced by Nvidia's earnings report, with concerns over the company's slowing growth trajectory. Daniel Newman, CEO of the Futurum Group, highlighted that even strong performance can lead to selling pressure if forecasts do not meet high expectations. This sentiment has been echoed across the semiconductor sector, with various companies tied to Nvidia's supply chain experiencing declines in their stock prices.
As the semiconductor sector grapples with the implications of Nvidia's earnings report, analysts are closely monitoring market trends and potential shifts in investor sentiment. The ongoing AI boom continues to drive demand for advanced semiconductor technologies, positioning companies like Nvidia at the forefront of innovation. However, the recent slowdown in growth raises questions about the sustainability of this momentum and the potential for future volatility in the sector. The outlook for semiconductor stocks will likely depend on how companies adapt to changing market conditions and investor expectations. The demand for high-performance chips is expected to remain robust as major tech players increase their AI investments. However, the market's reaction to earnings forecasts and growth projections will continue to play a critical role in shaping investor sentiment and stock performance in the coming months.