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Chipmakers in Asia and Europe rebounded on Wednesday after strong corporate earnings from Dutch group ASML added to the previous day’s rally in industry leader Nvidia.
The recovery came after US chipmaker Nvidia closed up nearly 9 per cent on Tuesday, recouping some of the heavy losses that wiped close to $600bn off its market capitalisation at the start of the week, when investors fretted over the threat from China’s DeepSeek to the US supremacy in artificial intelligence.
The emergence of DeepSeek, which promises to develop AI tools at a fraction of the cost of US rivals, has been called a contemporary “Sputnik moment”.
The Stoxx Europe 600 benchmark was up 0.5 per cent, led by ASML. The chip equipment maker announced earnings that beat analysts’ expectations, sending its shares 10 per cent higher in Amsterdam.
ASM, another chip stock, rose 7 per cent, while the Stoxx Europe 600 Technology index was up 4.3 per cent, more than erasing Monday’s rout.
“What happened on Monday was an extreme overreaction that was amplified by extreme positioning,” said Elyas Galou, global investment strategist at Bank of America, pointing to crowded positions in global tech stocks heading into US President Donald Trump’s inauguration and ahead of this week’s earnings from tech bellwethers including Meta and Microsoft.
“We saw a lot of buying yesterday, including from retail investors, which is supporting the market today,” he added.
Nvidia shares were flat in pre-market trading on Wednesday. Futures markets pointed to a further rebound in the US, with contracts tracking the Nasdaq up 0.3 per cent and those tracking the S&P 500 flat.
Japan’s tech-heavy Nikkei 225 closed up 1 per cent after a rebound in semiconductor stocks and AI investor SoftBank.
“Markets have taken a calmer look at developments in China with AI and perhaps it is a reflection that Monday’s moves were an overreaction,” said Mitul Kotecha, head of emerging markets macro and foreign exchange strategy at Barclays.
Asian market analysts at Goldman Sachs wrote in a note on Tuesday night that “oversold high-quality stocks could also provide some investment opportunities”, adding “we think strong companies will get even stronger”.
In Tokyo, Nvidia supplier Advantest closed up 4.4 per cent while semiconductor company Tokyo Electron was up 2.3 per cent. SoftBank ended the day with a 2.4 per cent rise.
Markets in the rest of Asia were also buoyant on Wednesday. India’s Nifty 50 was up almost 1 per cent in afternoon trading while Australia’s ASX 200 closed up 0.6 per cent. China, South Korea and Taiwan are closed for lunar new year holidays.
However, analysts warned that the recovery had not yet fully undone the panicked falls on Monday as investors digested the implications of the heavy AI investment by US tech in light of DeepSeek’s achievements.
“There’s not been a rebound like ‘oh, it was nothing’. It is just a reflection that Monday’s move was a tad overdone,” said Barclays’ Kotecha.
