Nvidia and other Tech giants tumble as the rest of the market surges
The tech-heavy Nasdaq Composite dropped 1.4% in October after a strong September.
The short version
- The PHLX Semiconductor Index fell more than 10% during the same month.
- Investors are pulling money out of chipmakers and hyperscalers.
- Meanwhile, the average stock in the market is seeing a historic comeback.
The artificial intelligence trade that carried the United States stock market in September hit a wall in October. The tech-heavy Nasdaq Composite was down 1.4% for the month as of Tuesday, while the pain in the chip space was far greater. Investors have dumped shares of major Tech companies as rising borrowing costs raised concerns about artificial intelligence spending.
Ayako Yoshioka, a senior investment strategist at Wealth Enhancement, which is a large independent registered investment adviser, explained that people started to worry the debt markets were signaling a capital shortage. The equal-weight version of the S&P 500, which puts the smallest company on par with giants like Nvidia, is outperforming the standard index by 4.1 percentage points so far this month, according to preliminary numbers from Dow Jones Market Data.
That marks the biggest reversal of fortune for the average stock on record, following a 4.5 percentage point underperformance in September. The PHLX Semiconductor Index is down more than 10% in October, and shares of Nvidia, Alphabet, which owns Google, and Meta Platforms, which owns Facebook and Instagram, have been hit hard.
The release of pre-IPO financials from Anthropic, an artificial intelligence safety and research company, helped spark a rally on Monday and Tuesday, but the broader Tech sector is still working through its recent pullback.
Photo: Coolcaesar, CC BY-SA 4.0, via Wikimedia Commons
