Nvidia Shares Plummet: Investors Are Concerned

Nvidia (NVDA) shares fell by up to 4% on Friday, leading a wave of selling in the technology sector. This situation caused fluctuations in the market as AI valuations heavily occupied investors' minds.

Investor concerns about a stock bubble connected to artificial intelligence led to volatile trading in the shares of the tech giants known as the "Fantastic Seven" last week. The circular dealings among major players in the AI boom have prompted comparisons to the dot-com bubble.

The decline in Nvidia shares signals a rough end to the week for the chipmaker. The stocks are expected to have lost more than 10% in value over the five-day period by midday.

On Thursday, Nvidia and other tech stocks fell after a Trump official stated that the government did not intend to support the AI sector. This comment referenced remarks made by OpenAI’s (Open Artificial Intelligence) Chief Financial Officer Sarah Friar. The White House’s AI and cryptocurrency expert David Sacks wrote on the X platform: "There will be no federal bailout for AI. There are at least five major leading model companies in the U.S. If one fails, the others will take its place."

Sacks emphasized that companies could clarify their own statements. Friar mentioned during a Wall Street Journal conference on Wednesday that the company producing ChatGPT might seek government guarantees for funding chips, stating that this would facilitate financing for AI chips in data centers. OpenAI CEO Sam Altman, however, dismissed the notion that the company was seeking government guarantees against failure.

On Thursday, chip manufacturers were already trading in the red following quarterly results from chip producer Qualcomm (QCOM). The results were strong, but investors were unsettled due to concerns about overvaluation in the sector.

Earlier in the week, Nvidia CEO Jensen Huang stated in an interview with the Financial Times that China would win the AI race by surpassing the U.S. Huang later shared on X that China was only “nanoseconds” behind the U.S. in AI. "It is crucial for America to stand out by winning developers globally and winning the race," he wrote.