Asian stocks post mixed results amid Nvidia leadership turmoil, Anthropic IPO buzz
- Japan’s Nikkei 225 and China’s Shanghai Composite rise, while Hong Kong’s Hang Seng and South Korea’s KOSPI fall.
- Nvidia CEO Jensen Huang’s resignation sparks fears of tighter US chip export restrictions ahead of the Trump-Xi summit.
- Japanese tech shares rally on strong investor demand for Anthropic’s upcoming IPO, which is already six times oversubscribed.
Asian stocks post mixed results on Friday, with Japan’s Nikkei 225 Index climbing 0.91% to around 61,370 and China’s Shanghai Composite rising 0.22% to 3,660. Conversely, Hong Kong’s Hang Seng Index fell 0.82% to 23,810, while South Korea’s KOSPI declined 0.49% to near 5,320.
Hong Kong’s Hang Seng Index dropped as concerns over Nvidia's leadership turmoil and its potential fallout for China's technology sector weighed on sentiment, overshadowing a broader recovery in regional semiconductor shares. The scandal, which saw Nvidia CEO Jensen Huang step down and CFO Colette Kress assume the role of interim CEO following reports of extramarital affairs, has revived fears of tighter US export restrictions and disrupted advanced chip supplies for Chinese AI developers.
Mainland Chinese markets delivered a mixed performance, with the Shanghai Composite rising while the Shenzhen Component edged lower as investors turned cautious ahead of next week’s summit in Shenzhen between United States (US) President Donald Trump and Chinese President Xi Jinping. The high-stakes meeting faces renewed uncertainty after allegations regarding Huang’s ties to a suspected Chinese spy threatened to reignite bilateral friction over semiconductor trade, potentially giving US lawmakers fresh ammunition to push for stricter technology controls.
South Korea’s benchmark KOSPI gave up its earlier gains, though the tech-heavy Kosdaq managed to rise. Major AI beneficiaries saw muted trading, with SK Hynix remaining flat and Samsung Electronics edging higher following reports that it is in talks to acquire US-listed data center cooling provider Modine Manufacturing to expand its AI infrastructure footprint.
Meanwhile, Japan’s Nikkei 225 Index rallied as investors reassessed the broader impact of Nvidia’s leadership shakeup on the artificial intelligence sector. Technology and AI-related stocks, including Kioxia Holdings, Advantest, and Tokyo Electron, led the rebound, buoyed by strong market anticipation for Anthropic’s IPO next week, which has already attracted orders roughly six times the available shares.
China chip trade risks deepen as geoeconomic tensions rise
Rabobank warns that the potential fallout from the Nvidia saga could extend well beyond equity market volatility into the broader geoeconomic sphere. Analysts caution that “even worse, if the US decision to look the other way on chip sales was a geoeconomic bribe to ensure Chinese rare earths and help in geopolitics, then things could get far more turbulent,” underscoring the risk that any reassessment of export-control enforcement might unsettle already fragile supply chains and strategic resource dependencies.
AI stocks FAQs
First and foremost, artificial intelligence is an academic discipline that seeks to recreate the cognitive functions, logical understanding, perceptions and pattern recognition of humans in machines. Often abbreviated as AI, artificial intelligence has a number of sub-fields including artificial neural networks, machine learning or predictive analytics, symbolic reasoning, deep learning, natural language processing, speech recognition, image recognition and expert systems. The end goal of the entire field is the creation of artificial general intelligence or AGI. This means producing a machine that can solve arbitrary problems that it has not been trained to solve.
There are a number of different use cases for artificial intelligence. The most well-known of them are generative AI platforms that use training on large language models (LLMs) to answer text-based queries. These include ChatGPT and Google’s Bard platform. Midjourney is a program that generates original images based on user-created text. Other forms of AI utilize probabilistic techniques to determine a quality or perception of an entity, like Upstart’s lending platform, which uses an AI-enhanced credit rating system to determine credit worthiness of applicants by scouring the internet for data related to their career, wealth profile and relationships. Other types of AI use large databases from scientific studies to generate new ideas for possible pharmaceuticals to be tested in laboratories. YouTube, Spotify, Facebook and other content aggregators use AI applications to suggest personalized content to users by collecting and organizing data on their viewing habits.
Nvidia (NVDA) is a semiconductor company that builds both the AI-focused computer chips and some of the platforms that AI engineers use to build their applications. Many proponents view Nvidia as the pick-and-shovel play for the AI revolution since it builds the tools needed to carry out further applications of artificial intelligence. Palantir Technologies (PLTR) is a “big data” analytics company. It has large contracts with the US intelligence community, which uses its Gotham platform to sift through data and determine intelligence leads and inform on pattern recognition. Its Foundry product is used by major corporations to track employee and customer data for use in predictive analytics and discovering anomalies. Microsoft (MSFT) has a large stake in ChatGPT creator OpenAI, the latter of which has not gone public. Microsoft has integrated OpenAI’s technology with its Bing search engine.
Following the introduction of ChatGPT to the general public in late 2022, many stocks associated with AI began to rally. Nvidia for instance advanced well over 200% in the six months following the release. Immediately, pundits on Wall Street began to wonder whether the market was being consumed by another tech bubble. Famous investor Stanley Druckenmiller, who has held major investments in both Palantir and Nvidia, said that bubbles never last just six months. He said that if the excitement over AI did become a bubble, then the extreme valuations would last at least two and a half years or long like the DotCom bubble in the late 1990s. At the midpoint of 2023, the best guess is that the market is not in a bubble, at least for now. Yes, Nvidia traded at 27 times forward sales at that time, but analysts were predicting extremely high revenue growth for years to come. At the height of the DotCom bubble, the NASDAQ 100 traded for 60 times earnings, but in mid-2023 the index traded at 25 times earnings.
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