May 23, 2024
Asia Chip Gauge Rises to Three-Year High on Strong Nvidia Report
, Bloomberg News
(Bloomberg) -- An index of Asian chip-related stocks rose to the highest level in over three years as the latest bullish sales forecast from Nvidia Corp. provided a fresh tailwind for the artificial intelligence trade.
The Bloomberg Asia Pacific Semiconductors Index climbed as much as 1.7% to its highest level since February 2021, erasing an April pullback. Among major Nvidia suppliers, Taiwan Semiconductor Manufacturing Co. gained as much as 1.5% to a record high.
Global chip shares retreated last month amid lowered expectations for US interest-rate cuts, and as concerns grew over the sustainability of an AI-driven rally that sent the Bloomberg Asian chip measure up 90% since late 2022. With renewed hopes for Federal Reserve easing and solid results from Nvidia, investors are returning to the AI theme.
Read More: Nvidia Delivers on AI Hype, Igniting $140 Billion Stock Rally
Nvidia’s shares jumped more than 7% in late US trading after the company reported results and a revenue outlook that beat analyst expectations, while also announcing a 10-for-1 stock split. Nasdaq 100 futures climbed as much as 0.9% in Asian trading hours Thursday.
Nvidia’s guidance and rising capex by majors “suggest continuously strong demand for AI semiconductors, at least until 2025,” Bloomberg Intelligence analyst Charles Shum wrote in a note. As the exclusive manufacturer of some of Nvidia’s key chips, TSMC is “on track to achieve mid-20% sales growth despite a slow recovery in smartphone and PC chips,” he added.
Shares of SK Hynix Inc., a supplier of advanced memory used in the US chipmaker’s processors, climbed as much as 3.2% in Seoul to their highest level since 2000. The stock also got a lift as the South Korean government unveiled a $19 billion package of incentives to bolster its chip sector.
“If demand for Nvidia’s new graphics processing units continues to exceed supply into 2025, which the US company predicted, SK Hynix’s sales-growth momentum may remain robust into next year,” wrote Bloomberg Intelligence’s Masahiro Wakasugi.
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