Nvidia's shares plunged 9.5% on Tuesday, marking the largest single-day decline in market value for a U.S. company, as investor optimism around artificial intelligence began to wane amid a broader market downturn. The company lost $279 billion in market capitalization, signaling increased caution regarding the AI technology that had previously driven significant stock market gains.
Following a disappointing quarterly forecast that failed to meet high investor expectations, concerns about slow returns on substantial AI investments have intensified, affecting other tech giants like Microsoft and Alphabet.
The Philadelphia Semiconductor Index also suffered, dropping 7.75%, its largest decline since 2020. Despite Nvidia's stock nearly tripling in value during 2024, its recent losses leave it with a year-to-date gain of 118%. As Wall Street braces for upcoming labor market data, including a critical payroll report, there is heightened concern regarding economic activity, particularly in the manufacturing sector. The market anticipates a potential interest rate cut from the Federal Reserve, but uncertainties linger about the job market's performance. Meanwhile, other chipmakers like Broadcom and Intel are feeling the ripple effects, with Intel's shares falling nearly 9% in response to plans for restructuring.
