00:00So that global tech sell-off continues. Asian markets tumbled as investors responded to disappointing AI guidance from U.S.
00:09chipmaker Broadcom.
00:10South Korea's stock market has been one of the biggest beneficiaries of the global AI boom, but on Friday, the
00:16benchmark KOSPI index closed down more than 5%.
00:20The decline was led by semiconductor heavyweight Samsung Electronics fell more than 6%, while SK Hynix dropped nearly 10%.
00:29The sell-off followed weakness on Wall Street overnight. Broadcom shares plunged around 14% in morning trading after the
00:36chipmaker's outlook for AI-related revenue fell short of analysts' expectations.
00:42Now, Broadcom forecast $16 billion in AI semiconductor revenue for the third quarter. That is $1.2 billion below market
00:52expectations.
00:53The company also left its full-year AI chip sales forecast unchanged.
00:59Now, Hong Hao is the managing partner of Lotus Asset Management.
01:03In the last two days, two negative news sort of emerged from the semiconductor industry.
01:11One is Broadcom's future guidance is weaker than expected.
01:16So, you know, people think of it as an indication of forward demand is not nearly as great as the
01:26market expected.
01:27And given that many of these stocks have risen multiple times, and also they're trading at a relatively high multiple.
01:35For example, I think Micron is trading at about close to 60 times per year, right?
01:40So, people will think that they are expensive, and therefore they're taking some profit off the table.
01:44And also this morning, there was another news coming up saying that NVIDIA is cutting the use of DRAM chips
01:51in its new Blackwell GPUs.
01:57So, if so, then, you know, people sort of interpreted as the demand for DRAM chips would be substantially less
02:06than hope.
02:08And therefore, you know, it has negative earnings expectation and also negative earnings implication as well.
02:16So, then, the sell-off sort of started in the Korean market and sort of spread out to the U
02:22.S. now.
02:23So, I still think that, you know, this is a misread, largely misread of the news.
02:30You know, for example, you know, the real reason why NVIDIA is cutting DRAM chips usage in its new architecture
02:39is because they couldn't get their hands on enough DRAM chips.
02:43So, they have to reduce it by half.
02:46So, I think overall, you know, even though the demand is still very strong,
02:54but I think at this stage, you know, because of a very high expectation and also very high valuation,
03:00you know, one shouldn't be too surprised to see, you know, people want to lock in some profit.
03:06I have to ask about the future because in the next week, we're going to see SpaceX listing.
03:12We know that OpenAI is also planning to list as-is Anthropic.
03:18Lots of action.
03:20How much further can this market grow?
03:23Do you see continued strong growth over the next three to six months or a gradual leveling off?
03:32I think, you know, the market will see some challenge in the next few months,
03:38even though I think new high is still possible.
03:41You're right to point out that, you know, the very sizable IPOs coming to the market is going to suck
03:46out liquidity from trading.
03:49And also, the SpaceX IPO is trading at a very high valuation.
03:56So, I think the market will be challenged, you know, given all that.
04:02But then at the same time, I think the listing of these two significant companies is a sign that, you
04:08know,
04:08the belief in the technology innovation will continue to grow.
04:15So, it is still too early to call a top, but yes, you know, at this stage,
04:19because of very high expectation and valuation, the market will be challenged.
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