Jensen Huang, co-founder and CEO of Nvidia, demonstrates the new Blackwell GPU chip during the Nvidia GPU Technology Conference on March 18, 2024 in San Jose, California.
David Paul Morris/Bloomberg via Getty Images
NVIDIA plunged 9.5% on Tuesday, wiping nearly $300 billion off the chipmaker’s market capitalization and dragging chip stocks down with it.
Intel fell by almost 8%, Marvell fell by 8.2% and Broadcom lost about 6%. AMD fell by 7.8% and Qualcomm fell nearly 7%. The VanEck Semiconductor ETF (SMH), an index that tracks semiconductor stocks, lost 7.5%, its worst day since March 2020.
Markets were sluggish on Tuesday after the ISM manufacturing index reported numbers for August that fell short of consensus expectations, raising concerns about the strength of the economy but potentially increasing the likelihood of a rate cut by the US Federal Reserve.
Chipmakers’ share prices have risen over the past year on the assumption that the boom in artificial intelligence will require companies to buy more semiconductors and memory to keep up with the increasing computing power requirements for AI applications.
The sector is led by Nvidia, which dominates the AI data center chip market, and its stock is still expected to rise 118% in 2024.
Other chip manufacturers are vying to share in this growth. Intel and AMD sell AI chips, but with little market penetration so far. Broadcom is working on Google’s TPU chips, and Qualcomm touts its chips as the best for running AI on Android phones.
Last week, Nvidia reported revenue of $30 billion for the quarter ended in July, more than Wall Street’s already high expectations. Revenue at the company’s data center business, which includes AI processors, rose 154 percent year over year, thanks in part to a handful of cloud and internet giants that buy billions of dollars worth of Nvidia chips each quarter.
Nvidia expects revenue growth of 80% in the current quarter.
Some investors found Nvidia’s forecast disappointing because it briefly hit the chipmakers that supply the company with memory and other parts.
Intel on Tuesday announced new laptop processors that can run AI programs on the device itself rather than relying on servers in the cloud. Broadcom, which works with major companies to develop custom AI chips, reports its third-quarter results on Thursday.
