Investors who snapped up shares of Nvidia Corp at the bottom of last month’s swoon were given a harsh reminder of the multiple forces pushing and pulling on the chipmaker’s business prospects.
What looked like a prescient bet last month — the stock surged 14 percent over 15 trading days — turned sour last week as shares tumbled on new US chip rules on China, a move that threatens a chunk of the one-fifth of Nvidia’s revenue that came from that country last quarter.
It was another harsh reminder for Nvidia fans that for all the hype around its position as a primary beneficiary of the artificial intelligence (AI) gold rush, the company’s more immediate prospects are at the mercy of the geopolitical struggle over the chips that power virtually every aspect of the modern world. It is also not immune to rising interest rates and the economic concerns weighing on markets.
Photo: Reuters courtesy of Nvidia
Nvidia vaulted to the top of performance charts in May after it gave a sales forecast that shattered analyst expectations and solidified the chipmaker as a main beneficiary of the AI trend. The stock’s record surge put Nvidia’s market capitalization in reach of US$1 trillion, a level it surpassed in June.
At its next earnings release in August, another blowout report catapulted shares to an all-time high.
Since reaching that peak, performance has been rockier. Shares fell 12 percent last month, Nvidia’s worst monthly performance this year, weighed down by concerns about demand sustainability.
The stock fell nearly 9 percent last week, but is still up 188 percent this year and remains the top performer on the S&P 500 and NASDAQ 100.
So far, Wall Street analysts have not changed their bullish tune on the stock.
While some have cut price targets, 95 percent of analysts have a buy-equivalent rating on Nvidia, data compiled by Bloomberg showed.
“This is a significant setback, but business is likely to continue to exceed expectations despite that,” Morgan Stanley analysts led by Joseph Moore — who recommended buying the stock in its September dip — wrote in a note on Wednesday last week, adding that Nvidia is still their top pick in the semiconductor sector.
Silvant Capital Management LLC chief investment officer Michael Sansoterra said the added export restrictions for China shipments hardly dent Nvidia’s long-term appeal.
“You’re going to see some volatility in the stock that’s not pleasant to go through, but it’s also not unexpected,” he said. “We like Nvidia in our portfolio, and we see value when it pulls back.”
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
INDUSTRY LEADER: TSMC aims to continue outperforming the industry’s growth and makes 2025 another strong growth year, chairman and CEO C.C. Wei says Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp and Apple Inc, yesterday said it aims to grow revenue by about 25 percent this year, driven by robust demand for artificial intelligence (AI) chips. That means TSMC would continue to outpace the foundry industry’s 10 percent annual growth this year based on the chipmaker’s estimate. The chipmaker expects revenue from AI-related chips to double this year, extending a three-fold increase last year. The growth would quicken over the next five years at a compound annual growth rate of 45 percent, fueled by strong demand for the high-performance computing
RSS