AI and Semiconductor Stocks Plummet Amid Geopolitical Tensions and Market Volatility!

Artificial intelligence (AI) stocks faced a sharp decline on Monday, driven by escalating geopolitical risks and market volatility.

Intel, Broadcom, and Arm experienced significant drops, with their share prices falling by 2%, 4.1%, and 5%, respectively, according to data from S&P Global Market Intelligence.

Nvidia and Micron also saw declines, with Nvidia dropping 2.3% and Micron down 3.8%.

Wait till all the goofy AI startups start imploding.

— Bart Trzynadlowski (@BartronPolygon) June 1, 2024

The decline in artificial intelligence and semiconductor stocks was largely influenced by bearish news on multiple geopolitical fronts.

A particularly alarming development was the breach of Japanese airspace by a Chinese military plane—an unprecedented move that followed a series of incidents involving Chinese aircraft in the Philippines.

This heightened fears of escalating territorial disputes and raised concerns about a potential Taiwan conflict.

i think this selloff is less about ai winners and losers and more about growth at these companies slowing down.

broadly i think you’re right though – tech hiring at large co’s will continue to be slow as they realize how much more they can get done with fewer engineers

— Aman Dhesi (@amansplaining) May 31, 2024

Taiwan Semiconductor Manufacturing (TSMC) is responsible for producing approximately 80% of the semiconductors used in advanced AI applications, making any disruption to its operations a significant risk to global supply chains and the broader economy.

Adding to these concerns, a report by The Wall Street Journal revealed that China is circumventing U.S. export bans on AI technology by using third-party AI processing services.

This has intensified the rivalry between the U.S. and China, as leadership in AI is seen as both an economic and national security priority for both nations.

Doesn’t bode well for job seekers. Everyone already wants in on the AI buzz, but if the AI companies themselves are getting hit this hard…

— Mike Cavaliere (@mcavaliere) May 31, 2024

The possibility of China invading Taiwan remains a looming threat, with the potential to cause widespread disruption in the semiconductor industry.

In addition to China-related developments, investors were also concerned about other geopolitical risks.

Poland reported that a Russian aircraft had entered its airspace en route to Ukraine, further increasing tensions in the region.

Absolutely correct. AI is not much of a moat and usually it’s dangerously slapped together atop some other proprietary tech.

— Robert Hansen (@RSnake) May 31, 2024

A security scare at a NATO military base in Germany also made headlines, as an intelligence report suggested that Russia might be planning to sabotage the base using drones.

Despite these geopolitical risks, the next market-moving event for AI stocks is likely to be Nvidia’s second-quarter earnings report, scheduled for release after the market closes on Wednesday.

Nvidia’s performance has frequently influenced trading in other AI stocks, and its upcoming earnings report is highly anticipated.

companies failed to deliver AI product or solutions are getting dumped

— TomLong@Haymingway (@Haymingway) May 31, 2024

If Nvidia exceeds Wall Street’s expectations, it could provide a boost to other AI stocks. However, given the high expectations, even a slight miss could result in substantial volatility.

Meanwhile, the broader stock market had a mixed performance on Monday.

The Dow Jones Industrial Average closed 0.2% higher, reaching a record high, while the Nasdaq Composite fell 0.9% as technology stocks underperformed.

Any insight into private venture backed AI startups?

— Dan McAteer (@DannyMcAteer8) May 31, 2024

The S&P 500 also declined, closing down 0.3%. Energy and consumer staples were the best-performing sectors, while technology and consumer services lagged behind.

In other news, Carl Icahn’s Icahn Enterprises saw its stock plummet more than 13% after announcing plans to raise $400 million through an “at-the-market” offering program.

The move follows Icahn’s recent settlement with the Securities and Exchange Commission, in which he agreed to pay $2 million in fines.

Stops hit so be it. New leaders will emerge

Show goes on (different train tho)

— Cookie-Monster.eth (@ThetaMentality) April 17, 2024

Tesla CEO Elon Musk also made headlines after sharing a video on social media showcasing Tesla’s new AI training supercluster, Cortex. Despite the announcement, Tesla’s stock fell nearly 4%, undercutting its 50-day moving average.

On the economic front, the Commerce Department reported a 9.9% surge in durable goods orders for July, significantly exceeding expectations. However, shipments of core goods, which contribute to GDP, fell 0.4% during the same period.

China’s PDD Holdings, the parent company of Temu, also struggled on Monday, with its stock falling nearly 25% following disappointing earnings results.

This generation of semiconductor fab tech is done. Nano-embossing lithography is the way of the future 😏

— 𓅮 sardonic whispers𓅲 (@whatnotsoforth) April 18, 2024

Although the company’s earnings beat expectations, its revenue missed Wall Street forecasts, and management warned of increased competition and investment spending.

The confluence of geopolitical risks and sector-specific challenges has created a volatile environment for AI and semiconductor stocks.

Lol it wasn’t a bubble, still isn’t

— SuspendedCap (@ContrarianCurse) April 17, 2024

As tensions between the U.S. and China continue to escalate, and with market events like Nvidia’s earnings report on the horizon, investors are likely to see continued volatility in the coming weeks.

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