Nvidia’s shares surged by 6% after it reported better-than-expected earnings and revenue, despite facing challenges from U.S. semiconductor export restrictions to China. This strong performance positioned Nvidia as a key indicator for both the semiconductor sector and AI-related stocks, driving a rally across the industry. Companies like Taiwan Semiconductor, AMD, and Qualcomm saw gains of about 1%, while Japan’s Tokyo Electron rose over 4%, and SK Hynix closed nearly 2% higher in South Korea. Similarly, European firms such as ASM International, BE Semiconductor Industries, and ASML saw positive movements in their stock prices.
The semiconductor industry continues to face pressures due to uncertainties around U.S. tariff policies and ongoing export restrictions to China. Major companies, including ASML, have lost billions in value due to these challenges. Nvidia reported a $4.5 billion write-off of H20 chip inventory that could not be exported to China, in addition to a calculated $2.5 billion in lost revenue. The U.S. government has mandated that various companies, including those involved in semiconductor chemicals and design software, halt shipments to China without proper licensing.
Nevertheless, Nvidia’s financial results for the April quarter have alleviated concerns about declining demand for its essential graphics processing units, which are crucial for training large AI models. This unexpected strength in earnings not only highlights Nvidia’s resilience amidst industry headwinds but also injects optimism into the broader semiconductor market, reflecting investor confidence in the sector’s potential for growth despite geopolitical challenges.
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