TLDR
- Nvidia stock fell 4.4% on Thursday, leading chipmakers lower amid continued AI demand concerns
- Marvell Technology plunged over 18% after earnings failed to impress investors looking for AI benefits
- CoreWeave, a major Nvidia customer, reportedly lost Microsoft business over delivery issues
- Other AI chipmakers like Broadcom, AMD, Arm, and Micron also saw significant declines
- Investor sentiment has shifted on AI stocks due to growth fears, supply chain issues, and regulatory risks
Nvidia shares tumbled 4.4% to $112.13 on Thursday, leading a broader decline across semiconductor stocks as investor concerns about artificial intelligence demand continued to mount. The drop extends Nvidia’s year-to-date losses to nearly 13%, with February marking its worst monthly performance since July 2022.
The sell-off came amid a flurry of negative news for the AI chip sector. Marvell Technology, which supplies AI semiconductors to major tech companies including Amazon and Microsoft, saw its stock plunge over 18% after reporting quarterly results that failed to excite investors.
“It’s been a rough year for NVDA so far,” noted Bernstein analyst Stacy Rasgon in a recent note to investors. “The stock (along with many of its AI-semi peers) has suffered, battered by a storm of growth fears, supply chain noise, and tariff and regulatory risks.”
Industry sentiment has clearly shifted on AI-related stocks in recent months. Futurum Group analyst David Nicholson pointed out that “Wall Street is catching up to the reality that Nvidia will not create a decades-long dynasty like Intel once did.”
Several developments added to investor anxiety this week. The Financial Times reported that CoreWeave, a private cloud services company preparing for a $35 billion IPO and a major Nvidia customer, has lost business from Microsoft due to delivery issues and missed deadlines.
Additionally, Chinese tech giant Alibaba unveiled a new AI model reportedly comparable to DeepSeek’s R-1. The announcement fueled fears that more efficient AI models could reduce demand for expensive AI hardware.
Other AI chipmakers faced similar pressure in Thursday trading. Broadcom fell 5%, while AMD dropped 2%. British chip architecture designer Arm declined 4%, Micron sank 3.5%, and Qualcomm slid more than 1.4%.
Nvidia might be a bargain at current prices
By recent valuation measures, Nvidia might appear to be trading at bargain prices. Its forward price-to-earnings ratio stands at around 25 times, well below its five-year average of 40 times, according to data from FactSet.
However, market sentiment appears to be working against AI stocks despite this apparent value opportunity. Investors are reassessing the sustainability of massive AI investments without clear returns.
Tech giants including Microsoft, Meta, Google, and Amazon have committed to spending over $300 billion on AI in 2025 alone. TSMC and Apple have pledged $100 billion and $500 billion respectively for US manufacturing investments in AI chips and servers.
“Some people are taking a deep breath and asking the question, ‘How long can we sustain this level of investment without positive ROI?'” Nicholson observed.
Adding to these concerns are fears about potential tariffs on Taiwan, where Nvidia’s chips are manufactured, along with possible additional export restrictions on semiconductors to Chinese customers.
The market is also monitoring the impact of recently imposed Trump administration tariffs on imports from Mexico, Canada, and China. Nvidia has only slightly rebounded from six-month lows reached earlier this week following these tariff announcements.
Benchmark Research analyst Cody Acree noted some positive elements in Marvell’s report but acknowledged that “the broader AI trade has recently come under fire from increasing investor concerns regarding the impact of tariffs and heightened foreign trading restrictions.”
These semiconductor market challenges come amid wider economic concerns. Mark Hackett, chief market strategist at Nationwide, characterized the situation as a “three-headed monster” of growth challenges, inflationary pressures, and uncertainty in Washington DC.
The stock continues to face challenges
For Nvidia specifically, the stock continues to face headwinds after a meteoric rise throughout much of 2023 and early 2024. The company, which has dominated the AI chip market, now faces questions about whether it can maintain its leadership position against increasing competition.
Raymond James analysts expressed surprise at Marvell’s modest quarterly performance “given the strong results from peers,” highlighting the uneven nature of the AI chip market’s current state.
Microsoft’s recent actions have also raised eyebrows. The tech giant reportedly walked away from existing data center leases and abandoned potential new ones representing over 1 gigawatt of capacity, which TD Cowen analysts described as indicating “the loss of a major demand signal.”
With Broadcom set to report earnings after Thursday’s market close, investors will be watching closely for additional signals about the health of the AI chip sector and whether the current pessimism is warranted.
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