The shares of Nvidia fell 9.5% on Tuesday, marking the deepest single-day dip in market value for a US firm. The AI firm lost $279 billion in market capitalisation. The decline in shares reflects a broader market selloff, as investors tempered their enthusiasm for artificial intelligence in response to lukewarm economic data.
This is a strong signal that investors are growing more cautious about the emerging AI technology that has driven much of this year’s stock market gains.
The PHLX chip index plummeted 7.75%, its biggest one-day drop since 2020.
The recent concerns about AI were sparked by Nvidia’s quarterly forecast last Wednesday, which fell short of the high expectations set by investors who had fueled a remarkable rally in its stock.
“Such a massive amount of money has gone to tech and semiconductors in the last 12 months that the trade is completely skewed,” an ETF strategist at Strategas Securities said.
Intel, however, tumbled nearly 9% after a Reuters report indicated that CEO Pat Gelsinger and top executives are expected to present a plan to the company’s board of directors to shed non-essential businesses and overhaul capital spending at the struggling chipmaker.
At its record high close in July, Nvidia had nearly tripled in value in 2024. Despite its recent losses, it is still up 118% year-to-date.
(With Reuters inputs)