Nvidia (NVDA) stock fell nearly 5% Thursday on investor concerns about a slowdown in artificial intelligence spending and possible delays in deliveries of the company’s AI chips.
Semiconductor stocks fell across the board. The PHLX Semiconductor Index (^SOX) fell 4%, falling more than the broader market. Nvidia rival Advanced Micro Devices (AMD) fell 3%, Intel fell 3.5%, Qualcomm (QCOM) fell 2.9% and Broadcom (AVGO) fell 3.9%. Meanwhile, ARM (ARM) plunged 8.5%.
Microsoft (MSFT) said in its earnings call late Wednesday that delayed shipments of GPUs (AI chips, or graphics processing units) from “third parties” weighed on the outlook for its AI cloud business this quarter. Microsoft primarily uses Nvidia’s GPUs in its data centers to power its artificial intelligence software.
“Microsoft said it is unable to meet current demand because its data centers are not up and running in time. This indicates that the NVDA chips the company relies on will not be available in time to support customers. “Possible,” DA Davidson analyst Gil Luria wrote in an article. Email Yahoo Finance.
Nvidia did not immediately respond to Yahoo Finance’s request for comment.
Persistent concerns that spending among AI hyperscalers would slow also contributed to the decline in Nvidia’s stock price. Microsoft Chief Financial Officer Amy Hood suggested on a call with analysts Wednesday night that the growth in AI-powered spending will eventually moderate, but it’s unclear when that will happen. It was unclear whether it would happen.
“As long as demand (for AI-related cloud) continues to grow, capex growth will slow and revenue growth will increase,” he said. “The pace depends entirely on the pace of adoption.”
Google’s parent company Alphabet (GOOG) said in its third quarter earnings report that it would not increase capital spending in the fourth quarter. “Looking forward, we are looking forward to investing in AI and other growth areas and increasing our focus on those activities,” Chief Financial Officer Anat Ashkenazi said on Tuesday’s post-earnings conference call with analysts. “We are working to balance the cost discipline necessary to provide funding.” He added that while spending will increase in 2025, “it will likely not be at the rate of increase seen between 2023 and 2024.”
Advanced Micro Devices’ quarterly results on Tuesday also raised concerns among investors, as the company’s fourth-quarter revenue outlook was slightly lower than expected. The company expects revenue of $7.5 billion for the current quarter, compared to the $7.55 billion expected by analysts tracked by Bloomberg. Weaker-than-expected guidance weighed on AMD stock, which posted its biggest single-day loss in two years on Wednesday.
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