TSMC, ASML And Other Chip Stocks Slide As Market Anticipates Nvidia's Earnings Report Impact

The stock prices of two major chip companies, Taiwan Semiconductor Manufacturing Co TSM and ASML Holding NV ASML, have taken a hit ahead of the Q4 earnings report of NVIDIA Corp NVDA.

What Happened: TSMC, the world’s leading producer of advanced processors, saw its shares fall nearly 1% on Wednesday morning in Taiwan. TSMC is responsible for manufacturing chips for companies like Nvidia and Apple. ASML, a Dutch semiconductor equipment manufacturer, experienced a 2.09% drop in its Nasdaq-listed shares on Tuesday.

Other Taiwanese semiconductor companies, such as United Microelectronics Corp UMC and MediaTek Inc MDTTF, also faced declines of 1.52% and 0.10%, respectively, on Wednesday.

Nvidia is set to release its Q4 earnings after the U.S. market closes on Wednesday. The market is keen to hear from Nvidia CEO Jensen Huang about the sustainability of the company’s significant growth.

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Nvidia’s shares have soared over 200% in the past year, driven by the surge in demand for its graphics processing units due to the AI boom.

Why It Matters: The upcoming earnings report from Nvidia could have significant implications for the stock market. A macro strategist at Academy Securities, Peter Tchir, warned that any disappointment in Nvidia’s earnings could result in a rapid 5% to 10% sell-off in just a few days.

Despite the drop in Nvidia’s stock, CNBC’s Jim Cramer suggested that this could be an opportune moment for new investors to enter the market. He advised, “I think you buy some if you don't own any,” and added, “Maybe buy some more tomorrow.”

Earlier in February, TSMC’s shares surged to an all-time high following a significant price target increase for Nvidia by Morgan Stanley. This move was attributed to the ongoing surge in demand for AI.

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