Asian chip stocks diverged as earnings results met with mixed reception from increasingly skeptical investors taking a closer look at what's under the hood.
Investors are digesting a host of earnings results from Big Tech, including Microsoft and Alphabet, as well as key Asian chip makers such as Samsung Electronics. AI supply-chain players have been among the biggest winners from the AI trade, but investors are becoming more discerning in their scrutiny of the financials.
"Investors remain willing to reward companies demonstrating clear AI-driven revenue momentum, but they're becoming increasingly unforgiving when spending, margins and cash generation fall short of expectations," said Chris Weston, head of research at Pepperstone.
Shares of South Korea's memory giants Samsung Electronics and SK Hynix, which have typically moved in the same direction, diverged Thursday. Samsung's shares slid 4.1% despite posting a fourth straight quarter of record earnings, while SK Hynix rose 2.6%.
Samsung's third-quarter net profit missing lofty expectation and its delayed shareholder-return plans disappointed investors, while peer SK Hynix was rewarded for its $75 billion shareholder-return plan announced alongside record profit a day earlier.
Investors increasingly prefer companies that translate their massive AI-driven earnings into direct shareholder returns, analysts said.
Meanwhile, Japanese chip-related companies were more resilient. Tokyo Electron rose 2.35% and Kioxia Holdings gained 1.15%. Major AI investor SoftBank Group advanced 1.8%.
In contrast, Chinese semiconductor companies fell broadly. Despite robust earnings, investors have turned more cautious over Chinese AI chip makers' elevated valuations as doubts over the AI boom builds.
Memory maker CXMT, which is due to release third-quarter results Friday, fell 3.4%. AI chip maker Moore Threads tumbled 12% despite reporting a nearly 1,800% jump in third-quarter sales. AI chip maker Shanghai Biren Technology slid 11%.
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