Fears of a growing bubble over the artificial intelligence craze resurfaced Thursday as major U.S. stock markets fell, less than 24 hours after chipmaker Nvidia’s strong results sparked a rally.
Wall Street initially rose after Nvidia, the world’s largest publicly traded company, reassured investors of strong demand for its advanced data center chips. But the relief faded, and the technology stocks at the center of the AI boom came under pressure.
In New York, the benchmark S&P 500 index closed 1.6% lower and the Dow Jones Industrial Average 0.8% lower. The tech-heavy Nasdaq Composite Index closed down 2.2%.
Earlier in the day, the FTSE 100 rose 0.2% in London, while the Dax closed 0.5% higher in Frankfurt. The Nikkei Stock Average rose 2.65% in Tokyo.
Nvidia, currently valued at about $4.4 trillion, has led an extraordinary rise in valuations among AI companies in recent months. Concerns about a bubble are growing as companies splurge on chips and data centers to gain a foothold in AI.
Chipmaker Nvidia continues to enjoy strong demand, with much-anticipated earnings beating expectations on Wednesday, but concerns remain that companies using these chips and investing in AI are spending big to drive demand.
“People selling semiconductors to power AI doesn’t allay concerns that some of these hyperscalers are spending too much money building out AI infrastructure,” said Robert Pavlik, senior portfolio manager at Dakota Wealth. “Your company is benefiting from it, but other companies are still spending a lot of money.”
Jobs data released Thursday morning was mixed, showing healthy growth in the labor market in September but also showing a slight rise in the unemployment rate, raising hopes that Fed policymakers will likely keep interest rates on hold at their next meeting in December.
Nvidia’s stock price fell 3.2%. The VIX index, which measures market volatility, also rose 8%.
Report contributed by Reuters
