Current:Home > InvestNvidia, chip stocks waver after previous day's sell-off-DB Wealth Institute B2 Expert Reviews
Nvidia, chip stocks waver after previous day's sell-off
View Date:2024-12-23 22:07:02
Chip companies led by market cap leader Nvidia were set to extend losses on Wednesday after a bruising sell-off in the previous session, reflecting the growing concern on Wall Street over the stocks' lofty valuations as AI optimism cools.
Nvidia fell 1.3% in early trading after Tuesday's 9.5% decline wiped out $279 billion from its market value, the biggest ever single-day decline for a U.S. company.
Enthusiasm around the growth of artificial intelligence technologies has propelled much of the equity market's gains this year, lifting the valuation of chip companies to levels some investors consider inflated.
Worries around a slow payoff from hefty AI investments have mounted, and Nvidia's forecast last Wednesday fell short of lofty expectations even though the company posted strong quarterly revenue growth.
"The focus is now shifting to valuations in the U.S. equity market in general, and some of the tech names have pretty large premium built in," said Tai Hui, Asia chief market strategist at J.P. Morgan Asset Management in Hong Kong.
Since peaking on June 18, Nvidia's shares have lost roughly 20% of their value. Its forward price-to-earnings ratio now sits just below 30, representing a decline in its valuation. The stock, however, is up more than 650% since the start of 2023.
"The whole AI development...is very promising. It's just the question of ... how are companies going to monetise all this development, how do we justify all this capex that is going in right now? Investors are just waiting for that answer."
Other chip stocks, including Arm Holdings, Broadcom, Applied Materials and U.S.-listed shares of Dutch chip equipment maker ASML were down between 1% and 4% on Wednesday in early trading.
Intel slipped 1.5%. Reuters reported earlier on Wednesday the company's contract manufacturing business suffered a setback after tests with chipmaker Broadcom failed.
Nvidia shares are also taking a hit after Bloomberg News reported the U.S. Department of Justice sent a subpoena to the company, deepening its probe into the AI heavyweight's antitrust practices.
Analysts have warned that regulatory scrutiny into Nvidia could step up further. The company last week disclosed requests for information from U.S. and South Korean regulators.
"Nvidia is not only the biggest player in the AI chips market, but it is also invested in a large number of other AI companies which means its fingers are in multiple pies," said Dan Coatsworth, investment analyst at AJ Bell.
"Regulators might want to know if it is giving preferential treatment to these investee companies or to customers who exclusively use its chips."
Rival Advanced Micro Devices climbed more than 2% after the company late on Tuesday named former Nvidia executive Keith Strier as its senior vice president of global AI markets.
Reporting by Deborah Sophia in Bengaluru; Additional reporting by Tom Westbrook; Editing by Arun Koyyur and Janane Venkatraman
veryGood! (8)
Related
- Colorado police shot, kill mountain lion after animal roamed on school's campus
- A Michigan Senate candidate aims to achieve what no Republican has done in three decades
- Donald Glover cancels Childish Gambino tour dates after recent surgery
- Helene costs may top $30 billion; death toll increases again: Updates
- Certifying this year’s presidential results begins quietly, in contrast to the 2020 election
- Opinion: Dak Prescott comes up clutch, rescues Cowboys with late heroics vs. Steelers
- Could Naturally Occurring Hydrogen Underground Be a Gusher of Clean Energy in Alaska?
- Chrissy Teigen Reveals White Castle Lower Back Tattoo
- Spirit Airlines cancels release of Q3 financial results as debt restructuring talks heat up
- Andrew Garfield Reveals Sex Scene With Florence Pugh Went “Further” Than Intended
Ranking
- Wheel of Fortune Contestant Goes Viral Over His Hilariously Wrong Answer
- The Tropicana was once 'the Tiffany of the Strip.' For former showgirls, it was home.
- Olivia Munn Details Journey to Welcome Daughter Méi Amid Cancer Battle
- TikToker Taylor Rousseau Grigg Detailed Health Struggles in One of Her Final Videos Before Her Death
- 'Red One' review: Dwayne Johnson, Chris Evans embark on a joyless search for Santa
- RHOSLC Star Whitney Rose's 14-Year-Old Daughter Bobbie Taken to the ICU
- Kristen Doute Reveals Surprising Status of Stassi Schroeder Friendship After Recent Engagement
- Mega Millions winning numbers for October 4 drawing: Jackpot at $129 million
Recommendation
-
John Krasinski Reveals Wife Emily Blunt's Hilarious Response to His Sexiest Man Alive Title
-
'I have receipts': Breanna Stewart emotional after Liberty get revenge over Aces
-
Amari Cooper pushes through frustrations, trade rumors as Browns continue to slide
-
A Michigan Senate candidate aims to achieve what no Republican has done in three decades
-
Bradley Cooper and Gigi Hadid Enjoy a Broadway Date Night and All that Jazz
-
Don Francisco gushes over Marcello Hernández's 'SNL' spoof of his variety show
-
Sylvester Stallone's Daughter Sistine Details Terrifying Encounter in NYC
-
When will we 'fall back?' What to know about 2024's end of daylight saving time