Nvidia turmoil reshuffles the AI trade. Winners, losers and what investors should watch
Some chipmakers stand to benefit from Nvidia's fallout, but other AI companies face pressure
Shares of AI-related US companies continued to decline on Friday, with neoclouds among the hardest hit, as a result of renewed worries about AI financing following Nvidia CEO Jensen Huang's sudden departure. The tech-heavy Nasdaq-100 fell 2.2 percent, on track to erase nearly $870 billion in market value if the losses persist until the close.
The Philadelphia SE Semiconductor index also dropped 6 percent, facing an over $670 billion downfall for the day. CoreWeave and Nebius Group, neocloud firms backed by Nvidia, dropped 10.8 percent and 12.1 percent, respectively, continuing their steep declines from the previous day when Huang resigned due to extramarital affairs revelations.
Nvidia, under Huang, had financed infrastructure built around its chips, a strategy that sparked demand but also raised concerns about funding loops between the chipmaker and its customers. Thomas Hayes, chairman of Great Hill Capital LLC, stated that this development could deal a significant blow to the sector due to the termination of Nvidia and Huang's financing support.
Nscale, a British cloud provider also backed by Nvidia, updated its IPO filing to anticipate a $1.7 billion net loss for the nine months ended September 30, which is higher than the $433.3 million loss from the previous year. Chip stocks, generally considered among the largest beneficiaries of the AI boom, also experienced declines.
Advanced Micro Devices fell 10.2 percent, and Broadcom lost 6.7 percent after both had gained for the past five sessions. Memory chipmaker Micron Technology dropped 5.6 percent, while data storage companies Western Digital and Sandisk each fell 7.7 percent and 9.3 percent, respectively. Photonic product makers Lumentum and Coherent, along with AI server makers Dell and HPE, declined between 6.2 percent and 10.7 percent each.
Utilities and equipment suppliers linked to the AI boom, including GE Vernova, Constellation Energy, and Vistra, decreased by 2 percent to 3.3 percent each. AI hyperscalers, excluding Meta Platforms, which rose 1.3 percent, were mostly lower. Oracle, Alphabet, Amazon.com, and Microsoft also saw declines ranging from 0.1 percent to 3.6 percent.
Nvidia's upcoming quarterly earnings and Anthropic's impending initial public offering could potentially influence AI sentiment.
Written by urgent.news from CNA - Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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- Neoclouds, AI stocks slide again as Nvidia turmoil rattles sector channelnewsasia.com
