Investors pull back from some chip stocks while Nvidia holds up

In short: Chip stocks tied to AI are falling, but the losses are not equal, with Nvidia and TSMC holding up better than many memory chip makers.

What's going on

Investors have recently sold off many stocks linked to the AI boom, including semiconductor companies (businesses that make computer chips). But the Financial Times reports that investors are not giving up on chip companies as a group. Instead, they are picking favorites.

Two companies that have held up relatively well are Nvidia and TSMC. Nvidia designs chips often used to train AI systems. TSMC makes chips for many other companies, like a factory that builds products designed by others.

The bigger drops have hit memory chip makers. Memory chips store data short term so computers can work quickly, like a desk where you keep papers you are using right now. SK Hynix fell by roughly a fifth in a week, and the report points to a new worry for investors, competition from China-based CXMT.

CXMT said it made progress in making advanced DRAM, which is a common type of memory chip. That could mean lower costs for CXMT. Even so, CXMT’s shares also fell, which suggests investors are worried that memory chip prices may have peaked and could start heading down.

What to watch

The Financial Times notes that it is hard to call the top of a cycle in chips, especially in memory, which tends to swing up and down. Another unknown is whether US government restrictions could limit who can buy and use CXMT’s chips. Investors may keep separating chip stocks into “likely winners” and “higher risk” groups as new information comes out.

Source: Financial Times