Drama on Wall Street: Nvidia loses its prestigious world title
The chip giant recorded price declines and lost its lead in the global market cap table to Apple, which reached an all-time high against the backdrop of a report on huge risks of hundreds of billions of dollars.
The trading day on the New York stock exchanges closed with a mixed trend after many hours of sharp fluctuations. Trading opened in an optimistic atmosphere based on the decline in global oil prices, but the mood changed quickly with the entry of sellers in the chip sector. At the end of the day, the Nasdaq index recorded a decline of about 0.2%, the S&P 500 index closed almost unchanged, while the Dow Jones index stood out positively, adding about 0.5% to its value.
The heaviest pressure was recorded in the chip manufacturing segment, as the SOXX ETF, which monitors the field, lost about 2% of its value and reached a low of more than two months. Prominent stocks in the sector, including Nvidia, ASML, AMD, and Micron, recorded noticeable price declines. Behind this trend is a report by The Information website, according to which a Chinese company backed by the local government has begun mass production of self-manufactured lithography machines. The technology in question is critical for producing circuits on silicon wafers, and this progress marks a significant step in Beijing's efforts to break free from dependence on Western components. Alongside this, the initial public offering of the Chinese chip company CXMT on the Shanghai Stock Exchange ended with a meteoric jump of 470% on the first day of trading.
Part of the decline in Nvidia's stock was attributed to a report by Bloomberg regarding a sharp jump in the costs of insurance against the company's default. The concern among investors stems from reports that Nvidia may provide huge guarantees of up to 250 billion dollars for an OpenAI project, alongside creating a joint venture of over 500 billion dollars with the parent company of the Korean SK Hynix. These steps raise concerns that Nvidia is taking on direct financial risks for its customers, instead of focusing on selling products only.
Following the retreat in the stock price, Nvidia lost its lead in the global market cap table to Apple, which climbed to an all-time high with a market value estimated at about 4.95 trillion dollars. Apple's stock has been outperforming since the beginning of the year, mainly thanks to its restrained spending policy in the field of artificial intelligence compared to other tech giants. Thomas Martin, a senior portfolio manager at Globalt Investments, noted in a conversation with CNBC that investors are re-examining risks due to the high uncertainty prevailing in the technology industry.
Parallel to the pressure on chips, there was a movement of funds towards software and financial stocks. The IGV ETF, which tracks the software sector, climbed by over 3%, aided by gains in Microsoft, Palantir, Salesforce, and ServiceNow stocks. The banking sector also showed resilience, as the XLF ETF rose by about 1% to a new high, supported by prominent gains in stocks such as J.P. Morgan, Goldman Sachs, and Visa.
