The global chip sector took a heavy blow on Friday after Nvidia shares unexpectedly ended in the red in the United States. This happened despite better-than-expected quarterly figures and an optimistic outlook from the company. Sentiment changed abruptly, which immediately affected companies closely linked to Nvidia.
The sell-off came after investors were shocked by broader risks in the financial markets, according to market analysts. CNBC cites a combination of factors for the turmoil, namely a correction in crypto markets, uncertainty about the timeline for interest rate cuts in the United States, and a more cautious attitude among investors toward technology stocks.
Analysts indicate that the growing discussion about a possible overheating of the AI market is putting additional pressure on the market. As a result, parties that benefit most from the AI boom, such as Nvidia and its direct suppliers, are more quickly affected when sentiment turns.
SoftBank loses heavily
SoftBank was subsequently among the biggest losers. Its shares lost more than 10% in Tokyo. Although the group has previously reduced its direct interests in Nvidia, it remains closely linked to the chip architecture used by Nvidia through chip designer Arm. In addition, SoftBank is investing heavily in AI projects that focus on Nvidia technology, including the huge Stargate program for data centers in the United States.
Chip manufacturers in South Korea and Taiwan were also under considerable pressure. SK Hynix, the main supplier of high-bandwidth memory for Nvidia’s AI chips, lost nearly ten percent. Samsung Electronics also fell sharply. TSMC, which manufactures a large part of Nvidia’s chip designs, recorded a clear decline in Taipei. Foxconn, a supplier of server hardware for AI applications, followed the same pattern.
The selling pressure then spread to smaller semiconductor companies. In Japan, Renesas Electronics, Tokyo Electron, and Lasertec lost ground, making it clear that the backlash was not limited to Nvidia’s direct partners. The broad correction indicates how heavily the sector relies on fluctuations in investor sentiment surrounding Nvidia. As soon as the market doubts the sustainability of the AI boom, the entire supply chain seems to move with it.