Nvidia's Slump Sends Shockwaves Through Wall Street Amid Cooling Economy

The S&P 500 and Nasdaq fell significantly as Nvidia's disappointing quarterly report ended Wall Street's AI rally, leading to a substantial drop in its stock value. Broader economic concerns and a cooling U.S. economy further weighed on investor sentiment, influencing market dynamics across several indices.

The S&P 500 and Nasdaq indexes took a sharp turn downward on Thursday, largely impacted by chipmaker Nvidia's lackluster quarterly report, which halted Wall Street's enthusiasm for artificial intelligence investments. Nvidia's stock plummeted by 8.5%, wiping $274 billion off its market value after its forecast hinted at weaker gross margins, overshadowing an optimistic revenue outlook.

This sentiment extended to other semiconductor companies, as Broadcom shares fell more than 7% and Advanced Micro Devices lost 5%, dragging the Philadelphia chip index down by 6.1%. The launch of budget-friendly AI models from China's DeepSeek earlier this year, coupled with a new report of Microsoft's possible data center lease cuts, has raised concerns about AI market overcapacity.

Additional data showing unexpected jumps in jobless claims and a slowdown in economic growth further unsettled investors. Declines extended across major indices, with the Nasdaq experiencing its largest single-day drop in a month, while notable movements were seen in various stocks as the market reacted to a broader spectrum of economic signals.