Nvidia (NVDA) stock fell over 5% early Friday while Intel (INTC) stock cratered over 29% and a broad decline in chip stocks led the tech sector lower as markets tumbled following a weaker than expected jobs report.
Following the July jobs report, which showed job growth slowed last month and the unemployment rate reached a nearly 3-year high, the Nasdaq slipped into correction territory, defined as a 10% drop from its most recent high.
Chip stocks have been at the center of recent market weakness, and news from Nvidia and Intel on Friday did not help the cause.
Intel results out late Thursday missed on the top and bottom lines, as the company also announced a $10 billion cost reduction plan, which includes cutting 15% of its workforce, while also suspending its dividend.
Intel’s poor quarter followed a cautious forecast from chipmaker Arm Holdings (ARM) on Thursday, while Amazon (AMZN) offered a revenue and profit warning for the current quarter that sent shares of the eCommerce giant down as much as 12%.
A report from The Information late Thursday said Nvidia faces a potential probe from the Justice Department over antitrust complaints from its rivals, another piece of negative news flow for the challenged chip trade.
With Nvidia the only one of the “Magnificent Seven” stocks to have not reported its latest quarterly results, an emerging theme is that Wall Street’s patience with massive AI investments appears to be wearing a little thin.
Nvidia and other chip stocks are set to end the week in the red after a volatile week.
The entire sector saw a massive one-day jump on Wednesday after chip maker AMD (AMD) posted better than expected guidance and Microsoft (MSFT) revealed higher spending on data center infrastructure in its latest quarterly results.
AI chip suppliers like Nvidia stand to benefit from Big Tech’s increased investments.
Nvidia rose nearly 13% on Wednesday buoyed by a bullish note from Morgan Stanley analysts led by Joseph Moore, who moved the stock to a ‘Top Pick’ after a recent pullback from record highs reached in June.
The movement over the past two…
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