How Are Asian Stocks Faring Amid Nvidia Leadership Turmoil and Anthropic IPO Buzz? Mixed Results Emerge

Asian equities diverge as gains in Japan’s Nikkei 225 and China’s Shanghai Composite contrast with declines in Hong Kong’s Hang Seng and South Korea’s KOSPI.
Concerns about stricter US chip export curbs intensify before the Trump-Xi summit following the resignation of Nvidia CEO Jensen Huang.
Strong demand for Anthropic’s forthcoming IPO, already six times oversubscribed, lifts Japanese technology shares.

A mixed mood prevails across Asian equity markets on Friday. Japan’s Nikkei 225 Index gained 0.91% to around 61,370, while China’s Shanghai Composite advanced 0.22% to 3,660. Elsewhere, losses of 0.82% took Hong Kong’s Hang Seng Index to 23,810, and South Korea’s KOSPI slipped 0.49% to near 5,320.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Worries about the implications of Nvidia’s leadership turmoil for China’s technology sector pressured Hong Kong’s Hang Seng Index, outweighing a wider rebound in regional semiconductor stocks. Following reports of extramarital affairs, the scandal prompted CEO Jensen Huang to step down, with CFO Colette Kress taking over as interim CEO. The episode has rekindled concerns about tighter US export restrictions and disruptions to advanced chip supplies for Chinese AI developers.

Caution ahead of next week’s Shenzhen summit between United States (US) President Donald Trump and Chinese President Xi Jinping left mainland Chinese markets divided: the Shanghai Composite advanced, but the Shenzhen Component slipped marginally. Allegations about Huang’s links to a suspected Chinese spy have added fresh uncertainty to the high-stakes talks. They threaten to revive bilateral tensions over semiconductor trade and could provide US lawmakers with fresh grounds to seek tighter technology controls.

Although the technology-heavy Kosdaq moved higher, South Korea’s benchmark KOSPI surrendered its early gains. Trading in prominent AI beneficiaries remained subdued: SK Hynix was unchanged, while Samsung Electronics posted a small gain. Reports indicated that Samsung Electronics is discussing the acquisition of US-listed data centre cooling provider Modine Manufacturing as it seeks to broaden its AI infrastructure presence.

In Japan, a reassessment of the wider implications of Nvidia’s leadership changes for artificial intelligence helped drive a rally in the Nikkei 225 Index. Kioxia Holdings, Advantest, and Tokyo Electron were among the technology and AI-linked shares leading the recovery. Enthusiasm for Anthropic’s IPO next week supported the move, with orders already amounting to roughly six times the shares on offer.

Could rising geoeconomic tensions worsen China’s chip trade risks?

The repercussions of the Nvidia episode may reach beyond equity market volatility and into the wider geoeconomic landscape, Rabobank warns. Its 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,” highlighting how a review of export-control enforcement could destabilise already vulnerable supply chains and dependencies on strategic resources.

AI stocks: key questions answered

What does artificial intelligence involve?

At its core, artificial intelligence is an academic field devoted to reproducing human cognitive functions, logical understanding, perception and pattern recognition in machines. Commonly known as AI, it encompasses several branches: artificial neural networks, machine learning or predictive analytics, symbolic reasoning, deep learning, natural language processing, speech recognition, image recognition and expert systems. The ultimate ambition across the discipline is to develop artificial general intelligence, or AGI: a machine capable of solving arbitrary problems without having been trained to tackle them.

How is AI used in practice?

Artificial intelligence serves a wide range of purposes. Among its best-known uses are generative AI platforms, including ChatGPT and Google’s Bard platform, which draw on training with large language models (LLMs) to respond to text-based questions. Midjourney, by contrast, produces original images from text supplied by users. Probabilistic techniques underpin other AI applications that assess an entity’s characteristics or how it is perceived. For example, Upstart’s lending platform evaluates applicants’ creditworthiness through an AI-enhanced credit rating system that searches the internet for information about their careers, wealth profiles and relationships. Elsewhere, AI draws on extensive databases of scientific studies to propose potential new pharmaceuticals for laboratory testing. Content aggregators such as YouTube, Spotify and Facebook collect and organise information on users’ viewing habits, enabling AI applications to recommend personalised content.

Which stocks offer exposure to the AI sector?

One company operating in this field is Nvidia (NVDA), a semiconductor manufacturer that supplies AI-oriented computer chips as well as some of the platforms engineers rely on to develop AI applications. Because its tools enable further uses of artificial intelligence, many supporters regard Nvidia as a pick-and-shovel investment in the AI revolution. Another is Palantir Technologies (PLTR), a “big data” analytics business with substantial US intelligence community contracts. Its Gotham platform allows that community to examine data, identify intelligence leads and support pattern recognition. Major corporations use Palantir’s Foundry product to monitor employee and customer data for predictive analytics and anomaly detection. Microsoft (MSFT), meanwhile, owns a sizeable stake in OpenAI, the privately held creator of ChatGPT, and has incorporated OpenAI’s technology into its Bing search engine.

Is artificial intelligence likely to fuel another stock market bubble?

AI-linked shares rallied after ChatGPT became available to the public in late 2022. In the six months after its launch, Nvidia, for example, surged well over 200%, quickly prompting Wall Street commentators to question whether another technology bubble was taking hold. Renowned investor Stanley Druckenmiller, who has held substantial positions in both Palantir and Nvidia, argued that bubbles never endure for just six months. Should enthusiasm for AI turn into a bubble, he said, extreme valuations would persist for at least two and a half years or longer, as happened during the DotCom bubble in the late 1990s. As of the midpoint of 2023, the best assessment was that the market was not in a bubble, at least for the time being. Although Nvidia then traded at 27 times forward sales, analysts forecast exceptionally strong revenue growth over the coming years. For comparison, the NASDAQ 100 commanded 60 times earnings at the DotCom bubble’s peak, against 25 times earnings in mid-2023.