Stocks experienced a downturn on Thursday, primarily due to the performance of chip giant Nvidia (NVDA). The company’s earnings report, released on Wednesday, triggered a decline in Nvidia’s shares, which in turn negatively impacted other semiconductor and AI-related stocks.
:max_bytes(150000):strip_icc():format(webp)/GettyImages-2194622863-f17da586f1b448dbbf2bb9263c36d6f9.jpg)
Nvidia shares, which closed down more than 8% on Thursday, have now decreased over 10% this year. Other chip manufacturers also felt the impact; Broadcom (AVGO) and Micron (MU) saw drops of over 6% each. The PHLX Semiconductor Index (SOX) itself decreased by 6%.
Nvidia’s decline significantly affected the major stock indexes. The Nasdaq Composite, which is heavily weighted with technology stocks, ended the day down 2.8%. The S&P 500 followed, dropping 1.6%, with losses across seven of its eleven sectors.
Nvidia’s fourth-quarter earnings report, released on Wednesday evening, exceeded analysts’ expectations. The company’s data center revenue, an indicator of AI demand, nearly doubled compared to the same quarter last year. However, the stock experienced volatility, fluctuating between gains and losses in after-hours trading and throughout the morning session.
Market participants had anticipated significant stock movement following the earnings release, with options pricing suggesting an 8% potential rise or fall by the end of the week. Thursday’s selloff suggests that investors were not satisfied with Nvidia’s results, as worries about AI-related spending and general economic conditions have recently dampened the enthusiasm surrounding AI stocks.
In the last week, investors have been selling off highly valued AI stocks, and this trend continued at a brisk pace during Thursday’s trading. Shares of Super Micro Computer (SMCI), which had soared yesterday after narrowly avoiding being delisted from the Nasdaq, fell 16%. Vistra (VST), a nuclear power provider that saw a greater than 200% increase in value last year, dropped 12% despite reporting better-than-expected earnings. Palantir (PLTR), another well-regarded AI stock, saw a 5% decrease in value.
This article has been updated to reflect the most recent share price information and provide additional context.
:max_bytes(150000):strip_icc():format(webp)/GettyImages-2194622863-f17da586f1b448dbbf2bb9263c36d6f9.jpg){kind=link}