Tech Stocks Drag S&P 500 Down as Nvidia and Microsoft Lose Momentum

The S&P 500 has slipped slightly as Nvidia and Microsoft's gains lose steam. The index was up just 0.1% in early afternoon trading, with the Nasdaq Composite also off its highs. The Magnificent Seven stocks, which have been driving the market's growth, diverged during the session.

The S&P 500 has slipped slightly in early afternoon trading on September 02, 2025, with the index up just 0.1% and the Nasdaq Composite off its highs. The Magnificent Seven stocks, which have been driving the market's growth, diverged during the session, putting the S&P 500’s modest gain in jeopardy. The Dow was down 252 points, or 0.6% [1].

The market's performance was influenced by the diverging fortunes of key stocks. Alphabet and Apple continued to lift the S&P and Nasdaq, following a court decision that will allow Alphabet to pay Apple to make Google the default search engine on iPhones despite antitrust worries. Tesla was also up 2.8%, but the rest of the Magnificent Seven stocks struggled to hold on.

Nvidia, a key player in the AI infrastructure landscape, has solidified its position through strategic partnerships. The company has secured a $1.3 billion chip lease to Lambda, a vertically integrated cloud provider, further strengthening its AI dominance. This partnership involves a four-year agreement to rent 10,000 AI chips, highlighting Nvidia's control over the AI infrastructure market [2].

Lambda's $2.5 billion valuation and Texas data center expansion underscore the growing neo-cloud competition, bypassing traditional hyperscalers like AWS. This competition is driven by the need for optimized AI workloads and the potential for cost savings. Nvidia's strategy extends beyond direct leasing, with plans to launch the DGX Cloud Lepton marketplace in 2025, connecting developers to a decentralized network of GPUaaS providers [2].

The broader AI infrastructure market is poised for significant growth. Big tech companies are set to spend $375 billion on AI infrastructure this year, with that number climbing to $500 billion next year. Semiconductors, particularly Nvidia's GPUs, are a key component of this infrastructure [3].

Despite the challenges posed by geopolitical tensions and emerging alternatives, Nvidia's strategic partnerships and vertical integration position it to navigate the complexities of the evolving AI landscape. The company's long-term outlook remains bullish, driven by the insatiable demand for AI compute and its unparalleled ecosystem [2].

References:

[1] https://www.barrons.com/livecoverage/stock-market-news-today-090325/card/the-s-p-500-slips-as-nvidia-microsoft-lose-steam-Q34S6A82eHJIWULJhn7M
[2] https://www.ainvest.com/news/nvidia-strategic-leverage-cloud-partnerships-strengthen-ai-market-dominance-2509/
[3] https://finance.yahoo.com/news/prediction-artificial-intelligence-ai-semiconductor-160500517.html