The Biggest AI Stock Crash: Nvidia Plummets 9.5% in Record-Breaking Loss - What It Means for Your Investments
In a historic single-day decline, Nvidia's shares dropped 9.5%, wiping out $279 billion in market value. This massive loss signals a shift in investor sentiment towards AI technology, which has been driving the stock market boom this year.
The broader market also saw significant losses, with the PHLX chip index falling 7.75%, its largest drop since 2020. Intel also took a hit, dropping nearly 9% after revealing plans to restructure its business.
Concerns about the profitability of AI investments have been growing, leading to declines in other tech giants like Microsoft and Alphabet. BlackRock strategists have questioned whether companies are wisely allocating capital towards AI projects.
Despite its recent losses, Nvidia is still up 118% year-to-date, showing the volatility in the tech sector. The chip index is up 14% in 2024, slightly trailing the S&P 500's 16% gain.
Analysts have revised their net income estimates for Nvidia upwards, but the company's stock is now trading at 34 times expected earnings, down from over 40 in June. Other chipmakers, like Broadcom, are also feeling the impact of the AI market slowdown.
As investors await the Federal Reserve's decision on interest rates, upcoming labor market data and economic reports will be closely watched for signs of recovery. The recent market turbulence serves as a reminder to diversify portfolios and stay informed about emerging trends in the tech sector.