Nvidia’s half-trillion dollar loss makes global chip stocks volatile

Nvidia’s half-trillion dollar loss makes global chip stocks volatile

The annual Computex computer trade show held in Taipei, Taiwan on May 30, 2017, prominently featured the Nvidia Corporation logo.

Global semiconductor stocks saw volatile trading on Tuesday following a significant decline in Nvidia shares during the previous session.

Early trading saw chipmakers in Europe and Asia face a decline in their shares, as investors reacted to Nvidia losing more than $500 billion in market capitalization in three trading days. However, some stocks managed to recover, with shares of the U.S. chipmaking giant up about 5.5% as of 11:40 a.m. ET on Tuesday.

Shares of Swiss semiconductor company STMicroelectronics ended the day down more than 1.4%.

In Europe, Dutch chip equipment giant ASML initially posted losses but reversed its trend to close up 0.18% as Nvidia shares recovered. ASML plays a crucial role in the global semiconductor market, producing and selling extreme ultraviolet (EUV) lithography machines that chipmakers use to produce integrated circuits.

Soitec, on the other hand, saw a slide of 0.1%, while ASMI rose 0.6% after falling earlier in the session. The pan-European Stoxx600 closed around 0.3% lower.

Asian semiconductor stocks also witnessed a volatile day. Taiwanese company MediaTek, known for its potato chips, saw its shares fall 1.8%, while South Korean company Samsung fell 0.3%.

Meanwhile, TSMC, the world’s largest chipmaker, and SK Hynix managed to avoid negative sentiment, gaining 0.5% and 0.9% respectively.

Nvidia stock rebounds

This followed a sharp decline in Nvidia shares for three consecutive sessions, resulting in a 13% decline from the all-time highs reached on Thursday.

Nvidia fell 6.7% on Monday, marking its second-largest decline of the year. However, shares began to rebound in early trading on Tuesday.

Last week, Nvidia surpassed Apple and Microsoft to become the most valuable U.S. company, with a market cap of more than $3.4 trillion. By the end of Monday, Nvidia had lost more than $540 billion in market value after hitting a record high in intraday trading on Thursday.

Nvidia said demand for its popular artificial intelligence graphics processing units (GPUs) remains high. Companies including Microsoft, Google, Amazon, Oracle and Half are investing billions of dollars in Nvidia chips to power their data centers and cloud services.

Later this year, Nvidia plans to start shipping its next-generation AI chips, known as Blackwell, which analysts say could kickstart another phase of significant growth for the chipmaker and its partners.