The Nvidia GPU Technology Conference held in San Jose, California, on March 18, 2024, showcased the new Blackwell GPU chip by Nvidia's co-founder and CEO, Jensen Huang. However, semiconductor stocks, including Nvidia, experienced a significant decline on Tuesday, with the S&P 500 falling by over 1%.
Nvidia saw an 8% drop, while other major chip companies like Intel, Marvell, Broadcom, AMD, and Qualcomm also experienced declines ranging from 6-8%. The SMH index, which tracks semiconductor stocks, was down by 6%, marking its biggest one-day loss in a month.
The slump in the market was attributed to the ISM manufacturing index reporting below-consensus figures for August, raising concerns about the strength of the economy and the possibility of a Federal Reserve interest rate cut.
Chip stocks had been on the rise due to optimism surrounding the increasing demand for semiconductors and memory to support AI applications. Nvidia has been a dominant player in this market, with its data center business experiencing a 154% annual revenue increase, driven by cloud and internet giants purchasing large quantities of Nvidia chips.
While Nvidia reported strong quarterly earnings of $30 billion, some investors viewed the company's growth forecast as a potential slowdown, impacting other chipmakers that supply Nvidia with components.
Intel made headlines by announcing new laptop processors capable of running AI programs on the device itself, reducing reliance on cloud servers. Broadcom, known for developing custom AI chips for big companies, is set to report third-quarter earnings on Thursday.
Overall, the semiconductor industry remains dynamic and competitive, with companies like Nvidia, Intel, and Broadcom vying for market share in the AI chip sector. Investors will be closely watching future developments and earnings reports to gauge the industry's trajectory.