– NVIDIA’s stock tumbled by 10%, erasing over $200 billion from its market valuation
– S&P 500 dropped by 0.9%, Nasdaq Composite dropped by 2.1%
– Other major tech companies saw their shares fall, analysts suggest retraction from “AI stocks” is a recalibration of risk ahead of uncertain earnings forecasts
In a volatile day for the markets, NVIDIA saw its stock plummet by 10%, wiping out over $200 billion from its market valuation. This decline also contributed to a 0.9% drop in the S&P 500 and a 2.1% drop in the Nasdaq Composite. Other major tech companies like AMD, Micron Technology, Meta, and Super Micro Computer also experienced significant declines in their stock prices.
Netflix also suffered a 9% drop after announcing a change in its subscriber reporting strategy, overshadowing its positive earnings. This market downturn is reflecting broader economic tensions and anticipatory anxiety over upcoming Big Tech earnings reports.
Analysts believe that the recent pullback in AI stocks is a result of recalibrating risks ahead of uncertain earnings forecasts. The hype surrounding generative AI in early 2023 led to major bets on AI stocks, but the market is undergoing a period of adjustment as companies reassess their investments.
The market is awaiting earnings reports from tech giants like Microsoft, Alphabet, and Meta, as well as NVIDIA’s forthcoming report in May. Despite NVIDIA’s significant growth in valuation, its actual production and shipment of chips remain speculative, making its true value uncertain.
Geopolitical tensions and a cautious outlook from the US Federal Reserve may also be contributing to the market’s volatility. Meta’s release of Llama 3 and other open-source models drawing attention away from OpenAI signifies a shift in the generative AI landscape.
Overall, while the market may be experiencing some turbulence in the short term, analysts believe that the long-term growth potential of AI remains promising.