On the surface anyway, things are going fine.
Just ask Taiwan Semi CFO Wendell Huang, who touted “continued strong demand” for the company’s most advanced products while tipping current-quarter sales growth of around 45% on Thursday.
Meanwhile, Anthropic’s profitable. Sort of. The company’s non-GAAP operating margin was positive in Q3, according to an investor presentation that also showed Anthropic brought in nearly $17 billion in revenue last quarter and was cash-flow positive. Good to know ahead of an IPO that’s existential not just for the AI trade, but for humanity too.
And yet, neither Taiwan Semi’s robust sales growth projection (to say nothing of the company’s 69% earnings growth last quarter) nor Anthropic’s update calmed frayed nerves on Thursday, when the Kospi tumbled nearly 8% to a six-month low, weighed down by heavy losses for Samsung and SK Hynix, which together account for something like 40% of index market cap.
As the figure above shows, the South Korean benchmark, a bellwether for chip sentiment, has now lost 20% across a seven-session losing streak.
Suffice to say things are perilously close to going off the rails again in South Korea, where the ill-fated launch of single-stock, leveraged ETFs in May turbocharged volatility.
Thursday’s harrowing selloff tripped the local circuit breaker. It was the first trading halt in nearly three months. If you’re keeping track at home, the Kospi’s triggered the breaker 10 times this year.
The fireworks come amid an escalatory rout in semis that saw the SOX down nearly 12% in six days. Sentiment went from bad to worse midweek when CoreWeave plunged and its bonds traded in distressed territory amid fresh concerns that the neocloud business model isn’t viable. Or won’t be for long.
The market’s “sensitive to whether capital raising will be sustainable and whether massive infrastructure investment will lead to real income, rather than [merely] revenue growth,” one analyst at South Korea’s largest brokerage said. Note that ASML dove more than 5% on Thursday, in what counted as its fifth-worst session of the entire year.
It’s possible — indeed it seems likely — that Anthropic’s update did more to sour sentiment than shore it up. The top-line sales figure from the company’s presentation actually suggests a deceleration.
$16.8 billion “would equate to a September revenue run rate of approximately $70 billion, which confirms fears of a Q3 slowdown,” JonesTrading’s Mike O’Rourke remarked. “Anthropic will need a material re-acceleration to reach the hoped-for $100 billion revenue run rate by year-end.”
