Global tech stocks in freefall; Milan sees the worst performance on the Technoprobe

(Il Sole 24 Ore Radiocor) - Heavy selling in European technology shares, which are following on from the sector’s slump in Asia (Nikkei -4.9 per cent) and the Nasdaq’s weakness the previous day (-1.9 per cent). On the FTSE MIB in Milan, Stmicroelectronics and Prysmian are falling sharply, having been halted due to excessive losses in early trading, but the worst-hit is Technoprobe, which is down by almost ten points. The rest of the European sector is faring no better: in Amsterdam, ASML is down 6.4 per cent, ASM down 9.6 per cent to 745 euros; in Frankfurt, meanwhile, Infineon is down by around 9.4 per cent to 50 euros. Overall, the European Stoxx 600 index for the sector has lost more than 3.3 per cent.

The market movement, as we were saying, follows the sharp correction in Asia, with selling concentrated in the semiconductor sector and driven by growing doubts about whether returns will be sufficient to justify the unprecedented investment in artificial intelligence. “The Kospi is showing a worrying trend, with a 22 per cent loss over two weeks,” observes David Pascucci of XTB, who notes that the Nikkei is now “heading towards September’s lows”. The sell-off follows the slowdown on Wall Street after higher-than-expected US inflation, which has brought the spectre of a Fed tightening back into focus: higher interest rates, in fact, increase the cost of capital and fuel doubts about the sustainability of the huge investments earmarked for data centres.

Not even the figures from Taiwan’s TSMC – “which beat estimates for profits and revenue”, as Pascucci explained – were enough to slow sales. Third-quarter revenue rose by 50 per cent to $46.7 billion and net profit by 69 per cent to $23.59 billion, with demand driven in particular by Nvidia and Apple. “Incredible performance driven by strong customer demand”, emphasised Pascucci, whilst the group confirmed annual investments of $60–64 billion. Banca Akros also points out that TSMC’s guidance for the fourth quarter, with revenue at around $53.3 billion at the midpoint of the range, is “slightly better than the consensus, and the statements confirm solid demand linked to AI and a supply chain for equipment that remains tight, in line with ASML’s comments” the day before, the analysts write. Management expects demand to continue to grow and remain higher than supply.

Not even the positive signs from Anthropic – which reported strong third-quarter revenue growth of around $16.8 billion to investors – were enough to convince market participants. The company is expected to begin marketing a potential IPO on Wall Street ‘in the second week of November’, according to Banca Akros, which estimates a valuation of between 1,800 and 2,000 billion dollars, ‘although concerns remain regarding profitability and the competitive landscape’, notes Banca Akros.