NEW YORK, NY – Stocks took a hit on Thursday, with chip giant Nvidia leading semiconductor and AI stocks lower following a disappointing earnings report. Nvidia’s shares tumbled over 7% in recent trading, marking a more than 15% drop from its all-time high in January. Other chipmakers like Broadcom and Micron also saw declines, with the PHLX Semiconductor Index dropping over 5%.
The tech-heavy Nasdaq Composite was down over 2% in late afternoon trading, while the S&P 500 also took a hit, despite some components trading in the green. Nvidia surpassed expectations with its fourth-quarter earnings report, showing a significant increase in data center revenue, a key indicator of AI demand. However, the stock struggled to maintain gains in extended trading following the report.
Investors were anticipating a significant stock movement post-earnings report, with options pricing predicting an 8% swing in Nvidia’s shares by the end of the week. The stock’s decline on Thursday put it on track for an 8% decrease from its pre-earnings price. This drop suggests that while Nvidia’s results were positive, they may not have been as strong as investors had hoped, amid concerns about AI spending and economic conditions impacting the AI sector.
The selloff on Thursday reflects a broader trend of investors selling off high-priced AI stocks in recent weeks, as doubts linger about the sector’s sustainability. Super Micro Computer, which saw a boost in shares after narrowly avoiding delisting from the Nasdaq, saw a significant drop. Vistra, a nuclear power provider that had a strong performance in the previous year, also saw a double-digit decline in share prices. Even Wall Street favorite AI plays like Palantir experienced a 5% slide amidst the market turbulence.
Overall, the decline in AI and semiconductor stocks showcases the volatility and uncertainty in the market, as investors navigate through changing economic conditions and shifting investor sentiment.