Stocks experienced a downturn on Thursday, primarily influenced by a notable drop in the share price of Nvidia (NVDA). The decline followed the release of the chipmaker’s Wednesday earnings report and led to decreases across the semiconductor and broader AI-related stock categories.
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Nvidia’s stock concluded the trading day down over 8%, pushing its year-to-date performance to a decline of more than 10%. Other chip manufacturers, including Broadcom (AVGO) and Micron (MU), also saw significant drops, with both falling by over 6%. The PHLX Semiconductor Index (SOX) experienced a substantial decrease of 6% as well.
The widespread decline in Nvidia’s shares had a negative impact on the major stock indexes. The technology-heavy Nasdaq Composite ended the day down 2.8%, and the S&P 500 fell by 1.6%, with seven of its eleven sectors closing in negative territory.
Despite exceeding analysts’ expectations with its fourth-quarter earnings, particularly in the data center revenue driven by AI demand, investors appeared hesitant. The company’s data center revenue nearly doubled compared to the same quarter last year. The stock’s performance was inconsistent, fluctuating between gains and losses in after-hours and early trading activity following the report.
Market participants had anticipated a sizable stock movement following the earnings announcement, with options pricing suggesting a potential 8% swing in either direction by the week’s end. The Thursday selloff indicated that investors were not entirely satisfied with Nvidia’s results, possibly due to increasing worries about excessive AI investment and broader economic concerns, which have recently dampened enthusiasm for AI-related stocks.
The trend of selling off richly-valued AI stocks continued aggressively on Thursday. Shares of Super Micro Computer (SMCI), which had surged the previous day after avoiding a Nasdaq delisting, fell 16%. Additionally, Vistra (VST), a nuclear power provider that enjoyed a significant increase in value last year, experienced a 12% drop, as the broader AI market’s decline overshadowed its better-than-anticipated earnings release. Palantir (PLTR) also saw a 5% decline.
This article has been updated since its initial publication to reflect updated share-price data and provide additional context.
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