Jensen Huang, co-founder and CEO of Nvidia, presents the new Blackwell GPU chip during the Nvidia GPU Technology Conference in San Jose, California, on March 18, 2024.
David Paul Morris/Bloomberg via Getty Images
Semiconductor stocks, led by Nvidiacollapsed Tuesday during the day down overall for the market. The S&P 500 fell more than 1%.
Nvidia fell 9.5%, erasing nearly $300 billion from the chipmaker’s market cap.
Intel 9% have died, Marvell fell 8% and Broadcom slid more about 6%. AMD lost 8% and Qualcomm down 7%. SMH, an index that tracks semiconductor stocks, fell more than 7%, its worst day since March 2020.
Markets slowed Tuesday after the ISM manufacturing index reported August figures that were below consensus expectations – raising fears about the strength of the economy but also potentially increasing the likelihood that the Federal Reserve will cut interest rates.
Chip stocks have surged in the past year on optimism that the artificial intelligence boom will require companies to buy more semiconductors and memory to keep up with rising computing requirements for AI applications.
The sector is led by Nvidia, which is still up nearly 129% year to date in 2024, and which dominates the AI ​​data center chip market.
Other chip companies want investors to understand their AI products and their potential for growth. Intel and AMD also sell AI chips, although they are in lower demand than Nvidia’s products. Broadcom works on it Google TPU chips, and Qualcomm promotes these chips as the best for running AI on Android phones.
Last week, Nvidia reported $30 billion in quarterly earnings for the quarter ending in July, exceeding Wall Street’s already elevated expectations. Revenue in the company’s data center business, which includes AI processors, rose 154% year-over-year, fueled in part by several cloud and internet giants buying billions of dollars in Nvidia chips each quarter.
Nvidia said it expects sales growth of 80% in the current quarter.
But some investors saw Nvidia’s forecast last week as a slowdown in growth, briefly hitting chipmakers who supply Nvidia with memory and other parts.
Intel announced a new laptop processor on Tuesday that can run AI programs on the device itself, instead of relying on servers in the cloud. Broadcom, which works with big companies to develop custom AI chips, reported third-quarter earnings on Thursday.
