Nvidia's value takes $1.2 trillion hit even as AI spending rises

On the surface, Nvidia Corp's US$900 billion (S$1.19 trillion) sell-off since its June record would suggest the artificial intelligence (AI) spending boom that propelled it there is cooling. But the undercurrents tell a far less dire story.

Microsoft, Amazon.​com, Alphabet and Meta Platforms - together accounting for more than 40 per cent of Nvidia's revenue - have all said they will keep investing billions into AI infrastructure.

Meanwhile, Super Micro Computer which makes data centre servers used in AI told investors it expects to generate up to US$30 billion in sales over the next year, blowing away analyst expectations. And yet, Nvidia the prime beneficiary of AI spending - has seen its shares tumble 25 per cent in less than two months.

"Nobody reduced numbers and said things are not working with AI or we're taking a pause on AI," said Mr Rhys Williams, chief strategist at Wayve Capital Management.

"It's just that people are very nervous." Investors had already been rotating out of expensive technology stocks for weeks, instead snapping up everything from small-capitalisation stocks to value plays, utilities and real estate companies.

Last week's weaker-than-anticipated jobs report further fuelled fears that the US economy may be slowing faster than anticipated.