Home » Angle: Shaking semiconductor stocks, speculating on Nvidia’s financial results; interest in “second-class stocks” | Reuters

Angle: Shaking semiconductor stocks, speculating on Nvidia’s financial results; interest in “second-class stocks” | Reuters

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Angle: Shaking semiconductor stocks, speculating on Nvidia’s financial results; interest in “second-class stocks” | Reuters

February 21st: With the Nikkei Stock Average approaching an all-time high, the rise in semiconductor-related stocks appears to be pausing ahead of the US Nvidia’s financial results. The photo was taken in front of a stock price board in Tokyo on the 19th (2024 Reuters/Issei Kato)

TOKYO (Reuters) – As the Nikkei Stock Average nears an all-time high, the rise in semiconductor-related stocks appears to be pausing ahead of the earnings results of Nvidia (NVDA.O), opens new tab. However, there are strong expectations for strong financial results and rising demand for AI (artificial intelligence), and many believe that it will continue to drive the market despite some short-term adjustments. Some predict that in the future, there will be a wider focus on “second-class semiconductor stocks” that have not been able to ride the rising trend. Since the beginning of the year, the Nikkei average has risen by about 4,900 yen, of which about 1,500 yen has been contributed by the rise in stocks of Tokyo Electron (8035.T), opens new tab and Advantest (6857.T), opens new tab. Including SoftBank Group (9984.T), opens new tab, which has a British semiconductor design arm under its umbrella, the three stocks actually pushed up the price by about 2,000 yen.

The announcement of Nvidia’s financial results in the US could have a major impact on immediate developments. In the upcoming Tokyo market on the 21st, cautious profit-taking dominated, with Tokyo Elec down 0.3% and Advanced down 1.9%.

Maki Sawada, a strategist at Nomura Securities, said, “The strong financial results have been factored in to some extent in the rise (of Nvidia stock) so far, and if the performance is as strong as market expectations, there will be an adjustment once the materials are exhausted.” “There is a possibility that it will happen.”

On the other hand, if the content exceeds market expectations or the management makes bullish statements about AI demand, it is likely that the rise in NVIDIA stock could lead to a rise in semiconductor-related stocks in the Tokyo market. “This could be a source of material,” said a senior economist at a domestic financial institution. Volatility is likely to increase after the announcement of financial results.

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Even if there is a short-term adjustment following Nvidia’s financial results, many market participants believe that there is still room for semiconductor-related stocks to rise.

“In addition to being a policy-oriented stock, there are also high expectations for increased demand for generative AI, making it a unique strength,” said Masanari Takada, quantitative strategist at JPMorgan Securities. Since the government has announced measures to support the semiconductor industry and huge fiscal expenditures, there is a perception that there is “no selling on national policy stocks” (Masayuki Otani, head of the investment information department at Securities Japan).

On the 5th, the Semiconductor Industry Association (SIA) announced a forecast that global semiconductor sales in 2024 will rapidly increase to $595.3 billion, an increase of 13.1% from the previous year.The market environment is also improving. . Masahiro Yamaguchi, head of investment research at SMBC Trust Bank, said, “Looking at the financial results of high-tech companies, there is a strong tailwind from demand for AI, and stocks are rising with the backing of their business results.Although the speed of rise is fast, the price movement itself is There’s nothing wrong with that,” he said.

While the market is expected to continue being led by “major equipment manufacturers” such as East Elec and Advantest, the P/E ratios of these major stocks are also at high levels. “It’s expected to be a good investment,” said Ryuta Otsuka, a strategist at Toyo Securities.

Kazuyoshi Saito, senior analyst at Iwai Cosmo Securities, points out “semiconductor materials manufacturers” as a group of stocks whose stock prices are expected to rise in the future. “While there is currently no clear sense that material manufacturers have bottomed out, stock prices are likely to rise from early spring onwards in line with actual demand.” Individually, it has been pointed out that Tokyo Ohka Kogyo (4186.T), opens new tab and Shin-Etsu Chemical (4063.T), opens new tab may be expected to rise. On the other hand, Takamasa Ikeda, portfolio manager at GCI Asset Management, believes that even if large-cap stocks, which make a large contribution to the index, enter a correction, there will be a cyclical shift toward small- and medium-sized stocks. KOKUSAI ELECTRIC (6525.T), opens new tab, which is regarded as an emerging semiconductor-related stock and is involved in the manufacture and sale of semiconductor manufacturing equipment, Shibaura Mechatronics (6590.T), opens new tab, which develops and sells semiconductor cleaning equipment. “Manufacturers such as JET (6228.T) and opens new tab are likely to be targeted.”

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If people start looking more towards small and medium-sized stocks instead of major stocks, “the medium- to long-term upward trend in Japanese stocks may not change,” said Hideyuki Suzuki, head of investment research at SBI Securities. .

◎PER of major semiconductor-related stocks and stock price fluctuations since the beginning of the year

Source: Created by Reuters based on LSEG data.

Hiroko Hamada Edit: Noriyuki Hirata

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