Ahead of Nvidia’s earnings report, shares of key chip suppliers TSMC and ASML experienced declines. Nvidia, the U.S.-based AI chip designer, is scheduled to announce its fourth-quarter earnings after the close of the U.S. market on Wednesday. Investors are particularly interested in Nvidia CEO Jensen Huang’s commentary, seeking insights into the sustainability of the company’s remarkable growth.
TSMC, the world’s largest producer of advanced processors and a crucial chip manufacturer for Nvidia and Apple, saw its shares drop by more than 1% on Wednesday morning. Meanwhile, ASML, a Dutch semiconductor equipment maker supplying critical machinery to chip manufacturers like TSMC, experienced a 2.09% decline in its Nasdaq-listed shares on Tuesday. ASML’s machines, including extreme ultraviolet lithography equipment, are essential for producing advanced chips used in products like Apple’s iPhone.
In addition to TSMC and ASML, other Taiwanese semiconductor companies, such as United Microelectronics Corp. and MediaTek, also saw slight declines in their shares on Wednesday.
Nvidia’s stock has surged over the past year due to soaring demand for its graphics processing units (GPUs) driven by the AI boom. Notably, Nvidia’s GPUs power ChatGPT, a popular generative AI chatbot known for its human-like responses.
However, Nvidia’s shares experienced a 4.35% decline on Tuesday, contributing to a broader downturn in U.S. tech stocks. Arm Holdings, Nvidia’s U.K.-based chip designer rival owned by SoftBank, also saw a 5.12% decrease in its stock price.
Despite the recent decline, Morgan Stanley remains optimistic about Nvidia’s performance, anticipating a strong quarter aligned with recent upward revisions to expectations. The focus is expected to shift towards Nvidia’s new product offerings. While some investors express concerns about overly optimistic near-term expectations, most maintain a constructive outlook on Nvidia’s stock, anticipating a relatively stable reaction to positive results.