$900 Billion Wiped Off Nvidia Stock While AI Spending Ramps Up

Nvidia Corp. has seen a $900 billion selloff since its record high in June, which might suggest that the artificial intelligence (AI) spending boom that fueled its rise is cooling.

Nvidia, the primary beneficiary of AI spending, has seen its shares tumble 27% in less than two months. I Photo: EdTech Stanford University:

However, the underlying situation is less dire, as reported by Carmen Reinicke for Bloomberg News.

Tech giants like Microsoft Corp., Amazon.com Inc., Alphabet Inc., and Meta Platforms Inc.—which together account for more than 40% of Nvidia’s revenue—have all stated they will continue investing billions into AI infrastructure.

Meanwhile, Super Micro Computer Inc., a company that makes data center servers used in AI, told investors it expects to generate up to $30 billion in sales over the next year, surpassing analyst expectations.

Yet, Nvidia, the primary beneficiary of AI spending, has seen its shares tumble 27% in less than two months.

“Nobody reduced numbers and said things are not working with AI or we’re taking a pause on AI,” said Rhys Williams, chief strategist at Wayve Capital Management LLC. “It’s just that people are very nervous.”

Investors have been rotating out of expensive technology stocks for weeks, instead favoring small-capitalization stocks, value plays, utilities, and real estate companies.

Last week’s weaker-than-expected jobs report has also fueled fears that the U.S. economy may be slowing faster than anticipated.

According to Williams, this uncertain macroeconomic backdrop may be weighing more heavily on Nvidia and its peers than quarterly earnings. The move lower was further exacerbated by the unwinding of global carry trades, which many on Wall Street have pointed to as a trigger for the recent surge in market volatility.