Nvidia drops by 10%, loses $300 billion 

Semiconductor stocks posted heavy losses in today’s trading session, led by Nvidia. More than 1% was taken off the S&P 500 index.

The chipmaker’s market value was $280 billion less after Nvidia dropped by 9.5%. Marvell was down 8%, Broadcom was down 6%, and Intel was down 9%. Qualcomm dipped by 7% and AMD lost 8%. On its worst day since March 2020, the SMH, an index that monitors semiconductor stocks, was down more than 7%.

Tuesday’s weak market performance was caused by the ISM manufacturing index reporting August data that was lower than expected, which raised concerns about the economy’s health while increasing the likelihood that the Federal Reserve would lower interest rates.

Nvidia exceeded Wall Street’s already lofty expectations when it revealed $30 billion in quarterly earnings for the period ending in July last week. A few cloud and internet behemoths that purchase Nvidia chips for billions of dollars every quarter helped the company’s data center division, which includes AI processors, see an annual revenue increase of 154%. This quarter, Nvidia says, it anticipates an 80% increase in sales.

However, some investors interpreted Nvidia’s previous week’s growth estimate as a temporary slowdown, which hurt the chipmakers that provide Nvidia with memory and other components. Intel revealed new laptop chips that eliminate the need for cloud servers and allow AI applications to operate directly on the device.

Chip stocks have grown over the past year due to expectations that businesses will need to buy more chips and memory to keep up with the increased computational requirements for AI applications because of the artificial intelligence boom. As the market leader for AI data center chips, its market share has grown by over 129% as of 2024.

Other semiconductor manufacturers want investors to know their AI solutions and growth prospects. Even if AMD and Intel CPUs market is smaller than that of Nvidia, these chips are still sold. Broadcom is promoting Google’s TPU chips, while Qualcomm is positioning its chips as the greatest for using AI on Android phones.