Yesterday’s almost 10% drop in Nvidia’s share price during the main trading session was not yet caused by news about the likelihood of an antitrust investigation. Asian stock markets on Wednesday morning showed their biggest decline since August 5 as investors increasingly question whether current levels of investment in artificial intelligence will be justified.
Image source: NVIDIA
According to Bloomberg, Asian stock indices related to the semiconductor industry fell noticeably on Wednesday: MSCI by 2.2%, Taiwan’s Taiex by 5.3%, Japan’s Topix by 3.4%, and South Korea’s Kospi by 3%. Of course, risks associated with Nvidia contributed to such dynamics, but analysts at the Taiwanese representative office of UBS believe that the main reason for the fall in Asian indices was the growing skepticism of investors regarding the timing and magnitude of return on investment in the artificial intelligence segment. The nervousness of stock market participants is intensified by not the most favorable macroeconomic indicators.
Some investors will use this correction to purchase shares of companies that are considered the main beneficiaries of the AI boom, such as Nvidia, since many experts are convinced that even in ambiguous market conditions, AI spending will remain consistently high for some time. Moreover, the current correction on the scale of the global stock market seems to be only a pale shadow of the August fall. Shares of Taiwanese TSMC fell by 5.5%, memory chip supplier SK hynix lost 9.2% in its stock quotes, and Japanese chip testing equipment manufacturer Advantest fell by 10%.
September is traditionally characterized by higher stock market volatility due to the beginning of the business activity season, and this year this seasonal trend is superimposed on expectations of an increase in the key rate by the US Federal Reserve. Asian issuers that are in one way or another connected with AI are valued less fairly by the stock market compared to their American partners and competitors, so their price growth potential is slightly higher. Fibonacci Asset Management Global experts generally believe that the demand for artificial intelligence systems and related infrastructure will remain high until at least the middle of next year.