The Nasdaq Correction deepened on October 9, 2024. The Composite Index dropped 10.4% from its July 10 high of 18,647.06 points, S&P Dow Jones Indices data shows.
Federal Reserve tightening and US-China semiconductor export controls fuel the decline. Tech-heavy Nasdaq faces valuation pressures, but AI leaders Nvidia and TSMC hold strength.
CNN Money Fear & Greed Index hit 16, extreme fear territory, on October 9, 2024. Investors flee growth stocks as borrowing costs rise.
Federal Reserve Tightening Squeezes Tech Valuations
Federal Reserve lifted federal funds rate to 5.25-5.50% in July 2023. Persistent inflation pushes rate cuts to 2025, September 18, 2024, dot plot indicates.
Elevated rates shrink multiples for unprofitable tech. Nasdaq forward P/E ratio fell to 24.5x from 30.2x peak, Bloomberg data as of October 9, 2024.
AI infrastructure stocks withstand headwinds better. Data center capex sustains demand.
Goldman Sachs analysts highlight AI capex cycle bolstering semis. Sector beats broader Nasdaq by 3% year-to-date, FactSet shows.
US-China Chip Wars Force Supply Chain Shifts
US imposed export controls on advanced AI chips to China in October 2022. Biden administration tightened rules in 2024, targeting Nvidia H100 GPUs.
China represents 20% of global semiconductor demand, SEMI data states. Controls spur diversification to Southeast Asia.
TSMC commits USD 65 billion to Arizona fabs as US CHIPS Act beneficiary. Company targets three facilities operational by 2028.
Taiwan Strait tensions rise with geopolitics. TSMC manufactures 90% of sub-5nm nodes vital for AI chips, TrendForce reports.
Nvidia Dominates AI Amid Headwinds
Nvidia reported Q2 fiscal 2025 revenue of USD 30 billion on August 28, 2024. Data center segment jumped 154% year-over-year to USD 26.3 billion, filings confirm.
Blackwell platform enters full production. CEO Jensen Huang flagged Q4 2024 shipments in earnings call.
China revenue dropped 10% to USD 4.6 billion from export curbs. US hyperscalers Microsoft and Amazon offset this, driving 50% of sales.
Nvidia trades at 35x forward earnings, off 2023's 60x peak, Yahoo Finance data. Gross margins stay at 75% on pricing power.
Morgan Stanley rates NVDA overweight. Analysts forecast 40% fiscal 2026 revenue growth from AI inference.
TSMC Powers Foundry Strength
TSMC recorded August 2024 revenue of TWD 233.98 billion (USD 7.2 billion), up 38.6% year-over-year. High-performance computing, led by AI, grew 57%, company states.
Firm guides 30% full-year 2024 revenue growth in USD terms. 3nm and 2nm nodes fuel Nvidia GPUs and Apple chips.
US fabs counter Taiwan risks. TSMC allocates USD 30 billion capex for 2024, record high, per Q2 earnings.
Stock's 22x forward P/E attracts value buyers. Dividend yield hits 1.5% at 15% payout ratio, FactSet data.
JPMorgan analysts cite TSMC's 5-10% pricing hikes for 2025. AI chip demand outstrips capacity by 20%, TrendForce estimates.
AI Supply Chain Defies Nasdaq Correction
Nvidia and TSMC ride secular AI trends. Global AI spending hits USD 200 billion in 2024, Gartner projects.
Fed tightening slams consumer tech hardest. Enterprise AI accelerates as cloud providers pledge USD 100 billion annual infrastructure spend.
US-China decoupling spurs onshoring. Intel and Samsung advance, but TSMC dominates advanced nodes to 2030.
Strong USD weighs on TSMC's TWD revenues. Hedges shield 80% of exposure, company reveals.
Valuation Snapshot and Comparisons
| Stock | Forward P/E | YTD Return | 52-Week High Decline |
|---|---|---|---|
| NVDA | 35x | +160% | -15% |
| TSM | 22x | +70% | -8% |
| QQQ | 24x | +19% | -12% |
Bloomberg data as of October 9, 2024. AI leaders beat Invesco QQQ Trust.
Yield curve steepens as 10-year Treasury yield climbs to 4.05%. Move hints at soft landing, lifting risk assets.
Forward Risks and Opportunities
Monitor Federal Reserve's December 18, 2024, meeting for cut signals. Markets price 85% odds of 25 basis points, CME FedWatch Tool.
November 5, 2024, US election shapes trade policy. Trump tariffs risk chip war escalation.
TSMC reports Q3 earnings October 17, 2024; Nvidia follows November 20.
AI efficiency gains threaten capex peaks. OpenAI and Anthropic ties bolster Nvidia demand.
Global investors favor these stocks as hedges amid Nasdaq correction. AI infrastructure anchors macro recovery.
