On Thursday, concerns about a potential bubble in the artificial intelligence (AI) sector emerged as major US stock markets declined, following a brief rally sparked by strong earnings from Nvidia, a leading chipmaker. Nvidia reported robust demand for its advanced data center chips, initially boosting market confidence. However, this optimism quickly faded, leading to declines among technology stocks central to the AI industry.
The benchmark S&P 500 index fell by 1.6%, while the Dow Jones industrial average decreased by 0.8%. The Nasdaq Composite, which is heavily weighted toward technology, dropped 2.2%. In contrast, European markets experienced gains earlier that day, with London’s FTSE 100 up by 0.2%, Frankfurt’s Dax increasing by 0.5%, and Tokyo’s Nikkei 225 rising by 2.65%.
Nvidia, now valued at approximately $4.4 trillion, has played a significant role in the rising valuations of AI-related companies. As businesses invest heavily in chips and data centers to establish a presence in the AI field, concerns about unsustainable spending have intensified. Despite Nvidia’s earnings exceeding analyst expectations, apprehensions remain about the financial commitments of companies utilizing these chips in AI development.
Robert Pavlik, a portfolio manager, expressed that while Nvidia benefits from this trend, there are concerns regarding excessive spending by companies building their AI infrastructure. Furthermore, a mixed jobs report released on Thursday indicated healthy growth in September’s labor market alongside a slight increase in unemployment. This report may influence Federal Reserve policymakers’ decisions to maintain interest rates during their upcoming meeting in December.
Amid these developments, Nvidia’s shares fell by 3.2%, and the VIX, a gauge of market volatility, increased by 8%.
Source: https://www.theguardian.com/business/2025/nov/20/stock-markets-ai-nvidia