Chips are in the red again on Thursday, and investors are getting a grim peak at what earnings season may hold for AI hardware makers, even if results blow past expectations.
The chip trade was getting hit hard after moves in Asia markets rattled investors. Importantly, semiconductor bellwether TSMC reported solid earnings that failed to lift the stock. The US-listed ADRs were down 2% shortly after the open, paring some of the premarket loss.
It's reminiscent of Samsung's recent sell-off after beating earnings on most metrics, and the bar is high enough that investors are spooked heading into some high profile earnings for US chip makers in the coming weeks.
"This all makes one wonder what US tech corporations will have to come up with to get investors genuinely excited again. This is important, as the earnings season picks up several gears over the next fortnight," David Morrison, Senior Market Analyst at Trade Nation, said on Thursday.
Within the chip trade, memory makers were hit the hardest. Korean giants SK Hynix and Samsung plummeted, dragging the KOSPI index down more than 6% and extending a bout of withering volatility for Korean equities.
The Nasdaq led losses in US stocks in the session. Big movers in the US chip trade include:
- SK Hynix ADRs: -9%
- Marvell Technology: -9%
- Micron Technology: -6%
- AMD: -6%
- Intel: -5%
- Nvidia: - 3%
Here's where major indexes stood around 12:30 p.m. on Thursday:
- S&P 500: 7,542.91, down 0.39%
- Dow Jones Industrial Average: 52,611.48, down 0.09% (-47.16 points)
- Nasdaq 100: 29,097.66, down 1.37%
Morrison noted that earnings beyond tech have been a mixed bag in terms of investor response, even as performance in the quarter was largely solid from many companies that have reported so far.
"Earlier this week saw results from the 'Big Five' US banks. While JP Morgan and Goldman Sachs jumped on strong numbers, the rest were a disappointment," he said. "But this seems to be as much about investor expectations than poor corporate performance."
In macro date, tame consumer and wholesale inflation readings this week whittled down the odds of a rate hike, but didn't do much to increase the odds of a cut. The result was a mostly tepid reaction to the upbeat data, especially as the US and Iran appear to be locked in a conflict with no end in sight.
"Investors remain cautious as geopolitical risks continue to cloud the outlook. The US and Iran exchanged further strikes on Wednesday, while tensions surrounding shipping routes through the Strait of Hormuz remain elevated.
