Semiconductor Stocks Plunge as Nvidia’s Market Cap Drops $300 Billion in One Day

Nvidia recently experienced a significant crash in its stock price, leading to a broader sell-off in the semiconductor sector. The company saw around $279 billion wiped off its market capitalization in a single day, marking the largest one-day loss of value for a U.S. stock in history. This decline follows Nvidia’s second-quarter results, which, while beating analysts’ estimates, may have fallen short of the high expectations set by investors. The stock dropped more than 9%, leading to a three-week low, with the effects rippling through other semiconductor stocks, such as Micron Technology and Advanced Micro Devices, which also saw significant declines​( AOL.com and Investopedia

In the unpredictable theater of semiconductors, Nvidia’s fall was more than just a drop; it was an electric crack through the air, a sudden descent from dizzying heights. One moment, the company was the shining star, its stock riding high on the crest of AI’s promise. The next, it plunged 9.5%, wiping nearly $300 billion from its market cap—a staggering figure that left traders and investors reeling. The shock didn’t stay confined to Nvidia; it spread like wildfire through the sector. Intel was dragged down almost 8%, Marvell tripped over its own feet with an 8.2% drop, Broadcom slipped about 6%, AMD sank 7.8%, and Qualcomm fell nearly 7%. The VanEck Semiconductor ETF, a broader measure of the sector’s health, tumbled 7.5%, suffering its worst day since the market chaos of March 2020.

Nvidia finished down close to 10% today. Who’s buying the dip?? Sorry a little late got caught up with school pic.twitter.com/VGHLEln1vA

— Bullish Ventures (@bull_invests) September 4, 2024

The market already felt like it was balancing on a razor’s edge. Earlier, the ISM manufacturing index had released figures for August that came in below expectations—a quiet storm brewing beneath the surface. This wasn’t just about numbers on a sheet; it was a whisper turned into a shout, a creeping fear that maybe the economic foundations weren’t as solid as they seemed. Speculation quickly arose that the Federal Reserve might have to consider cutting interest rates to ward off further decline. Amidst this uncertainty, the semiconductor sector’s plunge was like a flash of lightning in an already darkening sky, exposing the fragile nerves of a jittery market.

Still, if you stepped back from the brink for just a moment, you could see that semiconductor stocks had been on a remarkable journey over the past year. Driven by the endless hunger of artificial intelligence, companies raced to develop chips that could handle more data, run faster algorithms, power smarter machines. Nvidia was at the forefront of this charge, its stock soaring 118% in 2024, a testament to its commanding presence in the AI data center chip market and the almost feverish anticipation of its future growth.

⚡️ #Nvidia became $280 billion poorer overnight

The company’s shares fell by almost 10% overnight, which was a record drop in the history of the United States.

According to #Bloomberg, the hype around AI technologies may have gone too far and it will take a long time for these… pic.twitter.com/XxLqLIFavl

— 🆁🅾🅼🆈🅾🦈🅰🅻🅿🅷🅰 (@BTCRoom) September 4, 2024

But Nvidia wasn’t running alone in this marathon. Intel and AMD were in the race too, pushing forward with their own AI chips, though the road has been anything but smooth, and the market has yet to fully embrace them. Broadcom, ever the strategic player, partnered with Google to work on TPU chips, carving out its own territory in this competitive landscape. Qualcomm, not to be left behind, has positioned its chips as the perfect solution for AI on Android devices, eyeing a slice of the growing pie. It’s a race with no clear finish line, each company sprinting forward, eager to capture whatever piece of the AI boom they can.

Last week, Nvidia dazzled Wall Street with its earnings report, pulling in $30 billion in revenue for the quarter ending in July—a figure that soared past even the most optimistic forecasts. Its data center business, the crown jewel that houses its AI processors, reported a 154% growth year-over-year. The surge was driven by cloud and internet giants, those massive companies pouring billions into Nvidia’s chips to stay ahead in the AI race. Yet, Nvidia’s forecast of 80% sales growth for the current quarter, while strong, didn’t quite electrify investors as expected. There was a sense of holding breath, a feeling that perhaps the peak was in sight.

NVIDIA will never recover from this. They only grew 100000% revenue in a quarter. It’s over. pic.twitter.com/srKcgKJ30w

— Dwayne (@DwayneCodes) September 1, 2024

Amidst this, Intel decided it was time to stir the pot. The company announced a new line of laptop processors capable of running AI applications directly on the device—a move to cut the cloud out of the equation, to bring computing power back to the hands of the user. It was a bold step, a calculated risk in a market that thrives on disruption. Broadcom, meanwhile, is preparing to unveil its third-quarter earnings, and all eyes are on how it will steer through the current challenges, leveraging its partnerships and strategies to stay afloat in the competitive AI chip space.

The chaos of the past few days is a reminder that in the world of semiconductors, nothing is ever certain. The industry is a tempest, where fortunes can rise and fall with the blink of an eye, and the only constant is change. As the AI revolution continues to unfold, the battle for dominance is fierce, and the stakes could not be higher. Each company knows that in this race, there is no room for hesitation. It’s a world of rapid advances, sharp declines, and the unyielding pursuit of what comes next.

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• The sell-off in Nvidia shares also impacted other companies in the global semiconductor supply chain. South Korean companies like SK Hynix and Samsung Electronics, which supply Nvidia with high-bandwidth memory chips, saw their stocks drop by 8% and 3.45%, respectively. Similarly, European semiconductor stocks, including ASML, ASMI, Be Semiconductor, and Infineon, all traded lower in the wake of Nvidia’s plunge​ AOL.com

Major Points

• Nvidia’s stock fell by 9.5%, wiping out nearly $300 billion in market cap, causing widespread panic across the semiconductor sector.
• Other chipmakers like Intel, AMD, Marvell, Broadcom, and Qualcomm also saw significant declines, with the VanEck Semiconductor ETF dropping 7.5%, marking its worst day since March 2020.
• The downturn followed disappointing ISM manufacturing data, fueling fears of economic instability and speculation about potential Federal Reserve rate cuts.
• Despite recent losses, Nvidia and other chipmakers have seen strong gains over the past year, driven by growing demand for AI and advanced computing technologies.
• The semiconductor sector remains volatile as companies continue to compete fiercely for dominance in the AI chip market, with new product launches and strategic partnerships aiming to capture market share.

Al Santana – Reprinted with permission of Whatfinger News