Shares of chip companies TSMC and ASML experienced a decline ahead of Nvidia’s upcoming earnings report. Nvidia, a U.S.-based artificial intelligence chip designer, is set to release its fourth-quarter earnings after the U.S. market closes on Wednesday. Investors will be closely watching Nvidia CEO Jensen Huang’s commentary for insights into the company’s future growth prospects.
TSMC, the world’s largest producer of advanced processors, saw its shares drop by over 1% on Wednesday morning. The company manufactures chips for major players like Nvidia and Apple. ASML, a Dutch semiconductor equipment maker, also experienced a decline with its Nasdaq-listed shares closing 2.09% lower on Tuesday. ASML supplies crucial machines to TSMC, including the extreme ultraviolet lithography machine used in manufacturing advanced chips like those found in iPhones.
Other Taiwanese semiconductor companies, United Microelectronics Corp. and MediaTek, also saw slight drops in their share prices on Wednesday. The performance of these chip companies is closely tied to Nvidia’s success, as they are key suppliers in the industry.
Nvidia’s shares have seen significant growth over the past year, more than tripling in value. This surge can be attributed to the high demand for Nvidia’s graphics processing units (GPUs) driven by the AI boom. Notably, Nvidia’s GPUs power ChatGPT, a generative AI chatbot that gained popularity for its human-like responses.
However, on Tuesday, Nvidia’s shares experienced a 4.35% decline, leading a broader downturn in U.S. tech stocks. Arm Holdings, a U.K.-based chip designer owned by SoftBank and a competitor to Nvidia, also closed 5.12% lower.
Despite the recent dip in share prices, Morgan Stanley remains optimistic about Nvidia’s performance. In a report released on Tuesday, the investment bank stated that Nvidia is expected to have a strong quarter in line with increased expectations. The focus is expected to shift towards new products. While a significant reaction to positive results may not be immediate, Morgan Stanley analysts do not anticipate a sell-off either. Investor sentiment remains positive, although concerns about near-term expectations being too high have been raised.
Overall, the decline in chip stocks TSMC and ASML ahead of Nvidia’s earnings report reflects the cautious sentiment among investors. The market eagerly awaits Nvidia’s financial results and the insights provided by CEO Jensen Huang. As the AI industry continues to thrive, the performance of key players like Nvidia will have a significant impact on the semiconductor market as a whole.
