Stocks slid Thursday, weighed down by chip giant Nvidia (NVDA) in the wake of Wednesday’s earnings report, leading semiconductor and other AI stocks lower.
Nvidia shares finished Thursday off more than 8%, putting the stock down more than 10% this year. Fellow chipmakers Broadcom (AVGO) and Micron (MU) both fell more than 6%, while the PHLX Semiconductor Index (SOX) dropped 6% itsef.Â
Nvidia’s slump weighed on the major stock indexes broadly. The tech-heavy Nasdaq Composite ended down 2.8%, the S&P 500 was off 1.6%, with seven of its 11 sectors in the red.
Nvidia surpassed Street expectations with its fourth-quarter earnings report on Wednesday evening. The company’s data center revenue, a proxy for AI demand, nearly doubled from the same quarter last year. Yet the stock wavered, seesawing between gains and losses in extended trading last night and this morning.Â
Market participants on Wednesday afternoon were prepared for a big post-earnings stock move, with options pricing predicting shares would rise or fall 8% by the end of this week.
Thursday’s selloff implied that Nvidia’s results were not good enough for investors, as concerns about excessive AI spending and economic conditions have taken the wind out of the AI trade’s sails in recent weeks. Investors have sold off richly-priced AI stocks in the last week, a trend that continued at a rapid clip during Thursday’s selloff.Â
Shares of Super Micro Computer (SMCI), which soared yesterday after the AI server maker narrowly met a deadline to avoid having its stock removed from the Nasdaq, fell 16%. Nuclear power provider Vistra (VST), which rose more than 200% last year, dropped 12% as the broader AI slump overshadowed its own better-than-expected earnings report. Palantir (PLTR), another of Wall Street’s favorite AI plays, slid 5%.
This article has been updated since it was first published to reflect fresh share-price information and context.