A laptop keyboard, reflected binary code, and the Nvidia logo displayed on a phone screen are seen in this illustration photo taken in Krakow, Poland, on January 2, 2024.
Jakub Porzycki | Photo only | Getty Images
Shares of two major chip companies, TSMC and ASML, fell ahead of the earnings report from US-based artificial intelligence chip designer Nvidia.
Nvidia will report its fourth-quarter results after the US market closes on Wednesday. Wall Street will analyze Nvidia CEO Jensen Huang's commentary for clues about how long the company's massive growth can last.
Shares of Taiwan Semiconductor Manufacturing Company fell more than 1% on Wednesday morning. TSMC, the world's largest maker of advanced processors, makes chips for companies like Nvidia and Apple.
Nasdaq-listed shares of Dutch semiconductor equipment maker ASML closed 2.09% lower on Tuesday. ASML supplies companies like TSMC with machines that are critical to making chips. This includes the extreme ultraviolet lithography machine, which is used to produce the world's most advanced chips, such as those found in an Apple iPhone.
The other Taiwanese semiconductor companies United Microelectronics Corp. and MediaTek fell 0.91% and 0.31%, respectively, on Wednesday.
Nvidia shares have more than tripled in the last year as demand for its graphics processors soared thanks to the AI boom.
ChatGPT, a generative AI chatbot that went viral in November 2022 for its ability to generate human-like responses to user input, is trained and running on thousands of Nvidia GPUs.
Shares of Nvidia fell 4.35% on Tuesday, leading to a broader decline in U.S. technology stocks. Arm Holdings, the SoftBank-owned British chip designer rival, closed 5.12% lower.
Morgan Stanley said in a Tuesday report that Nvidia “should experience a strong quarter in line with recent increases in expectations” and that “focus should shift to new products.”
“As the stock is up over 50% [year-to-date] Even now, we don't expect an immediate strong reaction to positive results, but we don't expect a sell-off either. “Most of our investor calls are with clients who are bullish on the stock but are concerned that near-term expectations are too high, which usually leads to a favorable situation,” Morgan Stanley analysts said.