Nvidia Leads Tech Tumble as Market Jitters Over AI Demand and Regulatory Fears Intensify

On March 7, the U.S. stock market witnessed a notable downturn, with the Nasdaq index falling by 2.61%, spiraling into a technical correction. This decline impacted several tech giants significantly, placing Nvidia at the forefront with a sharp 5.7% drop in its stock price on the day.

Since the beginning of the year, Nvidia's stock has plummeted by nearly 18%, marking its worst month since June 2022. As a leading player in the AI chip manufacturing sector, Nvidia faces mounting pressures from various angles, particularly investor concerns over AI demand which have adversely affected its stock value. This sentiment has also permeated the broader chip manufacturing sector, resulting in concurrent declines across multiple companies in the industry.

Analysts have pointed out that Nvidia is confronted with challenges such as growth concerns, supply chain disruptions, and regulatory risks, including potential U.S. tariff impacts on exports to China. Further competition intensifies as newer players emerge, raising questions about Nvidia’s long-term market position compared to giants like Intel.

Alongside Nvidia, other major tech stocks also recorded declines; Broadcom dropped over 6%, Tesla and Meta fell by over 5% and 4% respectively, and Amazon saw a decrease of over 3%. The semiconductor, automotive manufacturing, and blockchain sectors also experienced notable downturns during this market shift.

On March 3, Nvidia's shares plunged 8.69% to $114.06, erasing $265 billion from its market capitalization in a single day. The company’s overall market value has dipped below $3 trillion, dropping to approximately $2.79 trillion from its peak, reflecting a retracement of over 23%, thereby entering a bear market as per technical analysis definitions.

Key factors cited for Nvidia's decline include fears of stricter U.S. export controls potentially impacting its revenue by $4 to $5 billion by 2026 and the lag as the company transitions between new and older product lines. Nvidia’s recent earning report, although exceeding expectations, did not manage to overcome the lack of significant surprises, prompting further concern about its profit margins. Looking ahead, Nvidia’s anticipated annual GTC conference might not offer the immediate positive catalysts the market seeks.