Nvidia (NVDA) shares fell 4% and Intel (INTC) shares plummeted more than 27% on Friday, with a broader selloff in semiconductor stocks leading the tech sector lower as the market tumbled following weaker-than-expected jobs data.
The July employment report showed that job growth slowed last month and the unemployment rate hit its highest level in nearly three years, sending the Nasdaq into a correction, defined as a 10% drop from its recent high.
Semiconductor stocks have been at the center of recent market weakness, and news from Nvidia and Intel on Friday made things worse.
Intel reported weaker-than-expected sales and profits late Thursday. The company also announced a $10 billion cost-cutting plan that included cutting 15% of its workforce and suspended its dividend.
Intel’s lackluster quarterly results followed a cautious outlook from chipmaker Arm Holdings (ARM) on Thursday, while Amazon (AMZN) issued a warning about its revenue and profits for the current quarter, sending the e-commerce giant’s shares tumbling as much as 12%.
Nvidia is the only one of the “Magnificent Seven” stocks to have yet to report its latest quarterly results, highlighting a theme that Wall Street’s patience with big AI investments is wearing a bit thin.
Hedge fund Elliott Management wrote to clients that the giant companies, particularly Nvidia, are in a “bubble” and that the technology behind artificial intelligence is “overvalued and many applications are not ready for primetime use,” the Financial Times reported after seeing the letter on Friday.
Additionally, The Information reported late Thursday that Nvidia may be facing a Department of Justice investigation over antitrust complaints from rivals, another negative for the embattled semiconductor industry.
Nvidia and other semiconductor stocks are on track to finish the week in the red after a volatile week.
The sector as a whole notched big one-day gains on Wednesday after chipmaker AMD (AMD) reported better-than-expected earnings guidance and Microsoft (MSFT) revealed increased spending on data center infrastructure in its latest quarterly results.
AI chip suppliers like Nvidia stand to benefit from increased investment from big tech companies.
Nvidia rose nearly 13% on Wednesday, buoyed by bullish comments from Morgan Stanley analysts led by Joseph Moore. Moore upgraded the company’s shares to a “top pick” following the company’s recent decline from its all-time high hit in June.
The moves over the past two days have erased Wednesday’s gains and Nvidia is on track to end the week down about 7%. The company’s shares are up more than 100% this year.
The story continues
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X at @ines_ferre.
