Nvidia's Glory Collapses as Rp 23,000 Trillion Vanishes Instantly
The US chip giant is facing significant turbulence amid a market crisis driven by the ‘explosion’ of artificial intelligence (AI) technology. Last Friday, chip manufacturer stocks plummeted, erasing US$1.3 trillion, or approximately Rp23,626 trillion, in market value.
Several established AI chip companies were hit hardest, specifically Nvidia, Micron Technology, AMD, and Broadcom. The PHLX semiconductor index dropped by 10.3%, marking its sharpest decline since March 2020, when the COVID-19 pandemic struck global stock markets.
The selling pressure on Friday followed losses on Thursday, after Broadcom released a quarterly report indicating that demand for its custom AI chip business failed to meet high expectations. The combined loss for the PHLX index reached 12% over two sessions, reflecting growing investor anxiety regarding expensive and highly inflated technology stocks.
This incident coincides with Elon Musk’s preparations for a spectacular initial public offering (IPO) for SpaceX next week, with a target valuation of US$1.75 trillion. While the chip index had reached record highs on Wednesday, the subsequent crash has significantly impacted recent gains.
Nvidia, the world’s most valuable chipmaker, fell approximately 6%, slashing more than US$300 billion from its market capitalisation, according to Reuters. Micron Technology plummeted 13%, erasing about US$150 billion in market value. Marvell Technology, a recent investor favourite, lost 17%, while AMD fell by nearly 11%.
“There are many people here who only buy stocks blindly when prices drop,” said Dennis Dick, an independent trader at Triple D Trading. “Buying stocks blindly when prices drop has made money for you, but that ended today.”
Concerns regarding higher interest rates also triggered panic among US stock market investors following stronger-than-expected employment data, causing the S&P 500 to drop by 2.6%. Broadcom, one of the largest beneficiaries of the AI race, lost 7.9%, bringing its two-day loss to nearly 20%.
“The semiconductor sector is already too saturated to buy. That is why we are seeing a sell-off. I do not think this is the end of the bullish market for semiconductors,” said Ohsung Kwon, Head of Equity Strategy at Wells Fargo.