Global chipmakers saw their market value soar as investors rushed to get exposure to artificial intelligence (AI), the latest sign of a frenetic bull run that is pushing tech stocks to all-time highs.
The sector is being swept up by a wave of good news from AI companies, including ChatGPT-owner OpenAI’s record US$500 billion valuation on an employee share sale and its pacts with a group of South Korean chipmakers, as well as a report that Intel Corp is in talks to add Advanced Micro Devices Inc (AMD) as a customer.
The bullishness has pushed the combined market capitalization of the Philadelphia Stock Exchange Semiconductor Index and a gauge tracking Asia chip stocks up by more than US$200 billion in the latest session, according to Bloomberg calculations.
Photo: Bloomberg
South Korean chip stocks were among the biggest gainers yesterday, surging on the OpenAI deal and sending the KOSPI to a record high. Shares of SK Hynix Inc jumped 10 percent, while Samsung Electronics Co advanced 3.5 percent.
Analysts say the bull run is being driven by a “fear of missing out” (FOMO), with investors largely dismissing concerns about a bubble developing in the AI sector.
“Tech momentum shows no sign of fading — as if gravity doesn’t exist — with headwinds brushed aside and every AI headline sparking bursts of euphoria,” said Hebe Chen (陳碧菲), an analyst at Vantage Markets Pty Ltd in Melbourne. “Bubble talk lingers, but it’s FOMO that’s clearly running the show. Momentum looks self-sustaining until upcoming fourth quarter earnings may force the reality check.”
Since ChatGPT launched the modern AI era, investors have scrambled to get exposure to technology that has the potential to shake up the global economy. They have piled into big infrastructure providers, such as chip linchpins Nvidia Corp and SK Hynix Inc, pushed up valuations of start-ups like OpenAI and Anthropic PBC, and poured capital into all manner of gear suppliers to the AI boom.
After striking a non-binding framework agreement with South Korean chipmakers, OpenAI CEO Sam Altman is next scheduled for Taipei, where he is reportedly scheduled to meet with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Hon Hai Precision Industry Co (鴻海精密). Shares of TSMC rose 3.02 percent and Hon Hai gained 2.97 percent yesterday in Taipei.
Chinese technology companies have also been on a strong upward trajectory, driven by investor enthusiasm for AI advancements. Fresh impetus came from the government’s announcement for increased support for the sector, alongside Alibaba Group Holding Ltd’s (阿里巴巴) plans to ramp up AI spending and Huawei Technologies Co’s (華為) unusual step of publicly unveiling its three-year vision for eroding Nvidia’s dominance. These developments helped push the Hang Seng Tech Index’s year-to-date gain to about 50 percent.
Overnight, Intel shares climbed as much as 6.8 percent after news Web site Semafor reported that the firm is in talks to add AMD as a customer for its manufacturing business. AMD currently depends on TSMC for much of its manufacturing needs.
The surge in valuations worldwide has worried some market observers who argue that, while datacenter spending and construction is accelerating, AI services have yet to go mainstream and earn the revenues needed to justify the near-unprecedented rally.
It remains uncertain if there would be eventual demand for all the computing power now under construction. Any setback in earnings from mega tech firms might spark a sell-off given their stretched valuations, as seen during the meltdown in April, JPMorgan Asset Management said.
For now, though, investors see more upside for tech shares, despite the lofty valuations.
“Tech stocks continue to defy gravity,” KB Securities Co managing director Peter Kim said in a Bloomberg TV interview. “I don’t see significant headwinds against Asian tech, possibly extending into next year.”
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