On a turbulent day for markets, NVIDIA stock plunged 10%, marking its worst performance since March 2020 and shedding over $200 billion in market valuation.
That downturn contributed to the S&P 500 falling 0.9%, based on Bloomberg data.
The broader market also felt the impact, with the tech-heavy Nasdaq Composite falling 2.1% on the close.
Other major technology corporations, including Advanced Micro Devices (AMD), Micron Technology and Meta, saw their shares fall 5.4%, 4.6% and 4.1%, respectively. Super Micro Computer, known for its server equipment supporting the AI rise, fell a staggering 23%.
Netflix also fell by around 9% after announcing that it will stop reporting its subscriber numbers often, overshadowing otherwise good profits.
Kevin Gordon, a senior investment strategist at Charles Schwab, commented on the day's market activity: “It's a tricky day for technology stocks. Everything that was going well in the beginning of the 12 months is unraveling, however the banks and energy sector are doing well with (defensive) staples.”
The stock market's decline reflects broader economic tensions and anticipation of next week's flood of earnings reports from Big Tech.
Analysts suspect this retreat from so-called “AI stocks” represents a recalibration of risk ahead of uncertain earnings forecasts.
Generative AI generated massive hype in early 2023, with discussions of impending extinction, artificial general intelligence (AGI) matching or exceeding human intelligence, and so forth and so forth – all resulting in big bets on AI stocks.
Tech corporations also poured money into startups like OpenAI, but Anthropic later received it Billions in investments from Amazon and Google.
As the market prepares for quarterly results from heavyweights like Microsoft, Alphabet and Meta, focus can also be shifting to NVIDIA's upcoming earnings report later in May.
NVIDIA's case is a wierd case. Its value doubled in 2023, but we're not talking a few small jump here – it doubled from $1 trillion to $2 trillion, easily becoming some of the invaluable and powerful corporate entities on this planet Modern times have ever existed.
However, NVIDIA still has hundreds of chips to construct and ship, making the colossal valuation very speculative for now.
Additionally, the market is grappling with geopolitical tensions and a cautious outlook from the Federal Reserve, which could limit rate of interest cuts to simply 1 / 4 point this 12 months, if in any respect.
The decline also coincides with that of Meta Release of Llama 3which, together with other open source models akin to Grok, particularly turns attention away from OpenAI.
While this likely won't impact NVIDIA stock, it still signifies a maturation period for generative AI as corporations and investors align their R&D investments with return on investment.
However, further AI hype and growth might be just across the corner.
