NewsNvidia stock plummets as AI market doubts shake investor confidence

Nvidia stock plummets as AI market doubts shake investor confidence

Nvidia, a giant in graphics processors and artificial intelligence, recorded a record drop in stock value. Simultaneously, on the international stage, attention was drawn to personnel changes in the office of Ukrainian President Volodymyr Zelensky.

U.S. flag is seen hanging on New York Stock Exchange building on Independence Day In New York, United States on America on July 4th, 2024.
(Photo by Beata Zawrzel/NurPhoto via Getty Images)
U.S. flag is seen hanging on New York Stock Exchange building on Independence Day In New York, United States on America on July 4th, 2024. (Photo by Beata Zawrzel/NurPhoto via Getty Images)
Images source: © Getty Images | NurPhoto
Robert Kędzierski

4 September 2024 09:47

On Tuesday, Nvidia's shares, a leader in artificial intelligence, experienced a sharp decline. This is the largest single-day drop in market value in American companies' history.

The PHLX (Philadelphia Stock Exchange) index, which tracks companies' quotations in the semiconductor sector, recorded a drop of 7.75 percent. This is the largest single-day drop in this indicator since 2024. The current fluctuations in the AI market come after Nvidia presented a quarterly forecast last week that did not meet investors' high expectations.

Concerns about AI investment returns

Todd Sohn, an ETF strategist at Strategas Securities, explained the reasons for such a strong sell-off. "Over the past 12 months, massive funds have been invested in the technology and semiconductor sector, leading to significant market imbalance." Concerns about the slow return on high AI investments also affect other tech giants.

Intel recorded a drop of nearly 9 percent following reports from Reuters about the company's restructuring plans. According to information, CEO Pat Gelsinger and key managers plan to present the board with a plan to eliminate unnecessary business areas and changes in the investment strategy of the struggling chip manufacturer.

Red on the US stock exchange

Weakness in the chip sector coincided with broad declines on Wall Street. The Nasdaq index fell by 3.3 percent, and the S&P 500 by 2.1 percent. According to the CME FedWatch tool, most investors expect the Federal Reserve to cut interest rates by 0.25 percentage points at the meeting on 18 September.

However, expectations for a 0.50-point cut rose to 37 percent from 30 percent after data indicated continued weakness in the manufacturing sector. This week, investors will receive a range of labour market data, with the key government employment report on Friday.

Related content
© Daily Wrap
·

Downloading, reproduction, storage, or any other use of content available on this website—regardless of its nature and form of expression (in particular, but not limited to verbal, verbal-musical, musical, audiovisual, audio, textual, graphic, and the data and information contained therein, databases and the data contained therein) and its form (e.g., literary, journalistic, scientific, cartographic, computer programs, visual arts, photographic)—requires prior and explicit consent from Wirtualna Polska Media Spółka Akcyjna, headquartered in Warsaw, the owner of this website, regardless of the method of exploration and the technique used (manual or automated, including the use of machine learning or artificial intelligence programs). The above restriction does not apply solely to facilitate their search by internet search engines and uses within contractual relations or permitted use as specified by applicable law.Detailed information regarding this notice can be found  here.