Semiconductor stocks had a varied performance on Wednesday, with European chip stocks surging due to strong earnings, while U.S. stocks, like Nvidia, declined as investors pondered the potential impact of China's low-cost AI tool.
On Wall Street, the Philadelphia semiconductor index struggled and was down 0.4%. The broader S&P 500 tech index also fell by 1.9%, with Nvidia leading the decline, dropping more than 6%.
Following a sharp 17% drop on Monday, Nvidia faced further challenges from DeepSeek's emerging AI tools, sparking concerns over development costs.
Investors remained uncertain about how to respond to DeepSeek's challenge, with Jack Ablin, Chief Investment Officer at Cresset Capital in Chicago, highlighting the dilemma: "The market for tech stocks is in this middle ground..."
Notably, European tech stocks soared, driven by ASML's 5.6% surge after reporting significant new bookings. The index of European tech stocks closed up 2.4%, with gains from BE Semiconductor and ASM International.
In contrast, U.S. chip stocks had a mixed day, with some, including Cirrus Logic and ARM Holdings, declining, while Coherent Corp and Advanced Micro Devices recorded gains. ASML's U.S. shares ended the day up by 4.4%.