Key Takeaways:
- Nvidia fell 3% to a session low, dragging the semiconductor index down 1.8%.
- The Nasdaq slipped 0.4% and the S&P 500 fell 0.1% as AI-chip leaders retreated.
- The pullback extended a selloff in AI names after AMD's post-earnings drop.
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Nvidia slides 3% as semiconductor selloff pressures major indices
The Nasdaq fell 0.4% and the S&P 500 slipped 0.1% as Nvidia dropped 3% to a session low, pulling the semiconductor index down 1.8%.
The move extended a pullback in AI-chip leaders after Advanced Micro Devices fell 7% intraday on Aug. 5 despite record second-quarter revenue of $11.54 billion, up 50 percent year over year, Barchart data show. Argus Research raised its AMD price target to $625 from $450, citing new AI and high-performance computing product launches, while Wells Fargo lifted its target to $700.
The Dow Jones Industrial Average fell 0.16%. Nvidia's slide weighed on the tech complex, with the semiconductor index dropping more than 1.8 percent as investors took profits in names that had rallied sharply. AMD, which reached a 52-week high of $584.73 on June 30, now trades about 18 percent below that level, with a forward price-to-earnings ratio of 63.4 times versus the industry average of 24.1 times. Wall Street still rates AMD a consensus strong buy, with 36 of 45 analysts at strong buy and a consensus price target of $603.10, implying about 25.5 percent upside.
Memory names have also retreated from recent peaks. Western Digital sits roughly 35 percent to 40 percent below its intraday high near $800, while Silicon Motion trades about 25 percent below its 52-week high near $355, according to Motley Fool analysis.
The selloff highlights the concentration risk in an index where Nvidia carries a large weighting. Information Technology accounted for 36.8 percent of the S&P 500 at the end of July, and the 10-year Treasury yield stood at 4.75 percent, according to Argus Research. Traders pointed to profit-taking in AI leaders and concerns that low-cost Chinese frontier AI models could undercut the economics of U.S. data-center spending as the drivers behind the pullback. With the S&P 500 up 10.1 percent year to date through July and the Nasdaq up 9.5 percent, further weakness in AI-chip leaders could push selling pressure across the major benchmarks as investors reassess valuations in a sector that has driven much of the market's advance.
This article is for informational purposes only and does not constitute investment advice.
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