TSMC, ASML shares fall ahead of Nvidia’s Q4 earnings report

Shares of two critical chip firms TSMC and ASML fell ahead of the US-based AI chip maker of Nvidia income statement.

Nvidia is set to report fourth-quarter earnings after the US market closes on Wednesday. Wall Street will analyze comments from Nvidia CEO Jensen Huang for an indication of how long the company’s massive growth can last.

Shares of V A Taiwanese semiconductor manufacturing company was down more than 1% Wednesday morning. TSMC, which is the world’s largest manufacturer of modern processors, produces chips for companies such as Nvidia and  An apple.

Nasdaq-listed shares of a Dutch semiconductor equipment manufacturer ASML closed 2.09% lower on Tuesday. ASML supplies machines like TSMC that are critical to chip manufacturing. This includes the extreme ultraviolet lithography machine used to make the world’s most advanced chips, such as those that go into Apple’s iPhone.

Other Taiwanese semiconductor companies United Microelectronics Corp. and MediaTek fell 0.91% and 0.31% respectively on Wednesday.

Shares of Nvidia have more than tripled in the past year as demand for its graphics processors has soared thanks to the AI ​​boom.

ChatGPT, an AI-generating chatbot that went viral in November 2022 for its ability to generate human-like responses to user prompts, has been trained and runs on thousands of Nvidia GPUs.

Shares of Nvidia tumbled 4.35% on Tuesday, leading a broader decline in U.S. technology stocks. Arm Holdings, the SoftBank-owned British chip designer rival, closed 5.12 percent lower.

Morgan Stanley said in a report on Tuesday that Nvidia “should see a strong quarter in line with recent increases in expectations” and that “focus should shift to new products.”

“With inventory growth of over 50% [year-to-date] we are no longer looking for an immediate strong reaction to positive results, but we are not expecting a sell-off either. Our investor conversations are primarily with clients who are constructive on the stock but are concerned that near-term expectations are too high, which typically creates a benign setup,” Morgan Stanley analysts said.