AI stocks continue to collapse! NVIDIA plunges 23% in three weeks, volatility exceeds Bitcoin 2 times

This site (120bTC.coM): The U.S. stock market is facing a critical week this week. The latest interest rate decision of the Federal Reserve, the July non-farm employment report, and the financial reports of 4 of the 7 technology giants will all be released. Just now As the market awaits the release of financial reports from technology stocks, chip stocks performed weakly on Tuesday: Nvidia plunged 7.04%, the largest drop in more than three months, and its market value evaporated by US$193 billion in a single day; however, it rebounded after the market closed.

Microsoft announced its financial report, and revenue was lower than expected

After the U.S. stock market closed, Microsoft released its financial report showing that revenue growth last quarter was not as good as market expectations, highlighting the huge investment in AI, which may take longer to reap returns than originally expected. It lasted for a long time, causing the stock price to plummet by more than 6% after the market closed. (Apple, Amazon, and Meta will also report earnings this week)

At the close: Microsoft shares fell 0.9%, Amazon fell 0.8%, Apple rose 0.3%, Amazon fell 0.8%, Meta fell 0.54% due to valuation concerns, measured The index of the "Technology Seven" fell 2%, and TSMC ADR also fell 3.4%.

The four major indexes ended mixed on Tuesday. The Philadelphia Semiconductor Index, dragged down by Nvidia's plunge, suffered the deepest decline:

• The Dow Jones Industrial Average rose 203.4 points, or 0.5%, to close at 40743.33 points.

• The Nasdaq index fell 222.79 points or 1.28% to close at 17147.42 points.

• The S&P 500 index fell 27.1 points or 0.5% to close at 5436.44 points.

• The Philadelphia Semiconductor Index fell 197.47 points or 3.88% to close at 4890.15 points.

The market is calling for the Federal Reserve to cut interest rates in September

Tom Essaye, founder of The Sevens Report, said that given the recent weakness in technology stocks, if the Federal Reserve (Fed) does not send a signal to cut interest rates in September this week, the market may It would be less optimistic, especially if the business performs poorly.

If the Federal Reserve is about to start an interest rate cut cycle, historical data shows that it is usually beneficial to stock market bulls. According to statistics from financial research company CFRA, in the previous 6 interest rate hike cycles, the S&P 500 index rose on average one year after the first interest rate cut. reached 5%. In addition, the average increase of the Russell 2000 Index also reached 3.2%.

NVIDIA volatility surpasses Bitcoin

An interesting data is that according to Bloomberg, NVIDIA’s stock price has collapsed 23% since July 10, falling from US$134.91 to US$103.73. NVIDIA’s 10-day volatility Even coming to twice as much as Bitcoin!

But despite this month’s share price collapse, Nvidia is still up about 109% this year, more than almost any other stock in the S&P 500, except Supermicro, which is also benefiting from the AI ​​boom.

As for the past two weeks, investors have continued to withdraw funds from large technology stocks such as Nvidia. The reason may be that investors are increasingly worried about whether large companies can obtain returns on their AI spending, and thus adjust their investment sectors.

Todd Sohn, ETF and technical strategist at Strategas Securities, said that this is the most painful time for Nvidia in the past eight months. It is not interesting at all when one of the best stocks corrects like this, but stocks of the same type like Nvidia Some elimination of the frenzy is necessary, and some sort of readjustment of expectations and attitudes will ultimately be beneficial.

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