Sign in Subscribe
Stock prices

US Tech Shares Plunge as AI Sector Concerns Grow

Strategic Insights

— 1 min read

US technology shares suffered a sharp drop on Friday, fueled by disappointing earnings from major chipmakers and growing concerns over the slowing growth in the artificial intelligence sector. The Nasdaq Composite and the Philadelphia Semiconductor Index saw significant declines, with Wall Street's broader benchmark, the S&P 500, also falling to its biggest one-day drop since early August.

Key Takeaways:

  • Marvell Technology, a semiconductor company, saw its shares plunge 17.6% after its data center revenue fell short of analyst expectations, prompting Bank of America to downgrade the company to 'neutral' from 'buy'.
  • Nvidia, the $4 trillion semiconductor giant, declined 3.6% following a revenue forecast that fell short of investor expectations and uncertainty over US export controls affecting sales in China.
  • The Philadelphia Semiconductor Index, tracking 30 of the largest chipmakers, was on track for its worst session since late July.
  • Tech stocks have driven US equities to record highs, but rising investment in AI infrastructure has recently spurred caution among investors.
  • Florian Ielpo, head of macro at Lombard Odier Investment Managers, attributed Nvidia's decline to concerns over its China penetration and forward guidance.
  • Marvell, which builds custom chips for Amazon and Microsoft, had benefited from investor excitement around AI hardware last year but has seen its shares fall over 40% this year amid trade uncertainties and questions over its ability to expand its client base.

Statistics:

  • The Nasdaq Composite dropped 1.2% in early-afternoon trading in New York.
  • Marvell Technology's shares fell 17.6% after its data center revenue fell short of analyst expectations.
  • Nvidia's revenue forecast fell short of investor expectations, prompting a 3.6% decline in the company's shares.
  • The Philadelphia Semiconductor Index was on track for its worst session since late July.
  • ExxonMobil and Nvidia formed a $4 trillion giant, accounting for two-thirds of the world's 10 largest companies.
  • The S&P 500 fell 0.8%, marking its biggest one-day drop since early August.

Sources:

  • Bloomberg
  • Bank of America
  • Lombard Odier Investment Managers
  • CNBC

Read more