Shares in major Asian chipmakers sank on Thursday, following a decline in US semiconductor giant Nvidia Corp., triggered by the company’s lackluster revenue and margin outlook for the third quarter.
Chipmaking firms directly exposed to the artificial intelligence (AI) darling, including its main supplier, South Korea’s SK Hynix Inc., dropped 5.13% and was the weakest performer despite announcing a low-powered sixth-generation DRAM chip.
Samsung Electronics Co. Ltd., which is pursuing a supplier spot in the Santa Clara, California-based company, also fell 2.62%.
Taiwanese contract chip behemoth and Nvidia’s AI chip producer, Taiwan Semiconductor Manufacturing Co. (TSMC) Ltd., slipped 1.87% in Taipei, while its New York-listed shares tumbled 3.07% in after-hours trading.
The stock of electronics manufacturer and another key supplier of Hon Hai Precision Industry Co. Ltd., internationally known as Foxconn, was also down 0.27%.
Japanese semiconductor testing equipment maker Advantest Corp. traded 0.49% lower, while the country’s largest chipmaker, Tokyo Electron Ltd., shed 1.05%.
Nvidia’s Chinese rival, Semiconductor Manufacturing International Corp. (SMIC), gained 0.37%.
Nvidia Q3 Revenue, Margin Guidance Disappoints
Nvidia shares lost 2.10% on Wednesday and were trading 6.89% lower in the after-market as its latest outlook overshadowed last quarter’s earnings of $0.68 per share, which topped forecasts, and an additional $50 billion stock buyback, casting uncertainty over the long-term profitability of AI trade.
Underwhelming earnings from some of its peers had also previously signaled higher prices and somewhat limited returns from investments in the AI industry.
For the third quarter, the firm expects revenue of $32.5 billion, with a 2% potential rise or fall. The estimate beat analysts’ projections of $31.9 billion, but expectations ranged as high as $37.9 billion.
The company reported revenue of $30.0 billion for the three months ended July 28, marking a 15% increase from the earlier quarter and surpassing the $28.7 billion projected.
The chipmaker sees adjusted gross margin for the current quarter at 75%, with a possible addition or reduction of 50 basis points (bps). The figure slightly missed analysts’ average forecast of 75.5%. Its second-quarter margin stood at 75.7%, also slightly below the estimate of 75.8%.
Still, Nvidia’s gross margin remained above competitors due to its expensive AI Superchips. In its fiscal second quarter, the adjusted margin of its US rival Advanced Micro Devices (AMD) Inc. was 53%.
