Nvidia plunges 6% as S&P 500 edges higher: S&P 500 today: S&P reverses losses to rise 0.4% while Nvidia sinks 5% — Why Meta’s chip shift is shaking the AI trade as Alphabet jumps 4%
Nasdaq fell 0.1 percentA modest but meaningful comeback after its strongest day since mid-May. Investors had boosted AI stocks earlier in the week, but momentum faded as competition in the chip space re-emerged. The move reflects a market that remains sensitive, valuation-driven and deeply influenced by a handful of mega-cap players. When these stocks shake, the entire index feels it.
Nvidia down more than 6%almost puts you on the losing track 180 billion dollars Meta is at market cap after noting that it may explore Google’s TPU chips for future data center expansion. Meta considers wider adoption of Google’s AI chips 2027 can even rent them beforehand via Google Cloud. The very possibility of this shift has investors rattled because Nvidia’s revenue relies heavily on huge, recurring orders from large AI projects.
News removed Alphabet almost 4%will bring the company closer $4 trillion valuation and validation of Google’s growing AI hardware ambitions. Broadcom also gained, benefiting from positive sentiment around AI infrastructure spending, as companies look for alternatives that lower costs, increase efficiency and reduce dependence on a single supplier. Investors said the reaction underlined how tightly tied markets are to demand for AI chips and how small changes can trigger big stock moves.
Market experts said these developments point to a new phase in the artificial intelligence race. Falling computing costs are expected to increase demand, making it easier for non-tech companies to adopt automation and artificial intelligence tools. Analysts believe this could increase productivity, improve margins, and create significant economic ripple effects by supporting AI upgrades in finance, retail, logistics, manufacturing, and healthcare.
At the same time, this trend creates uncertainty for chip leaders. As companies diversify suppliers, there may be a shift in leadership in the AI ecosystem, although Nvidia still has unique software and ecosystem advantages. Competition from wealthy firms can ultimately suppress pricing power even in markets where demand is high. The takeaway for investors: AI demand is huge, but dominance may no longer be guaranteed. Despite this week’s partial stock recovery, major US indexes are still on track for a losing month. S&P 500 lost over 1 percent, Nasdaq fell more than 3 percentAnd Dow lost over 1 percent. The weakness reflects ongoing concerns about technology valuations, cautious money flows and uncertainty about whether the market can mount a Santa Claus rally or face a year-end slowdown. While most of the year’s gains are concentrated in a few AI giants, even a short-term cooling in the sector could drag broader markets down. Meanwhile, expectations for a Fed rate cut have risen and reshaped market discourse. Now traders see More than 80% probability Following signals that the slowdown in labor markets might justify easing, a quarter-point cut was made in December, up from 40% in the previous days. Although this change increases optimism in interest-sensitive sectors, some worry that it may indicate a deeper economic measure.
Why are Nvidia’s shares falling so fast today?
The biggest shock of the day has arrived NvidiaOne of the most influential and most owned names in the market. stock fell more than 6%It wiped out billions of dollars of market value within hours. The decline follows new indications that Meta may shift some of its future AI chip spending to Google’s TPU chips.
Meta evaluates whether Google’s AI accelerators will support its long-term data center roadmap. Internal planning includes wider use of the chips. 2027Possibility of renting in a much shorter time through cloud services. This potential shift has raised questions about whether Nvidia can maintain its dominant position in AI hardware.
Investors reacted quickly because Nvidia’s earnings and valuation depend heavily on large-scale orders from major AI developers. A hint that one of the biggest buyers might diversify its suppliers was enough to send stocks plunging. It has also raised broader questions about pricing power in the AI chip market.
While the news put pressure on Nvidia, other chip-related companies also benefited. Alphabet up almost 4%approaching somewhere $4 trillion valuationTraders saw the move as an important validation of Google’s long-term chip strategy. Broadcom also posted gains, boosted by strong momentum in AI infrastructure spending across the industry.
Even after the sell-off, Nvidia shares are on the rise 28% for 2025. But the stock is having its worst month since September 2022, when it fell more than 19%. Tuesday’s decline alone wiped out tens of billions in market value and revived fears that AI spending cycles could fluctuate as hyperscalers diversify their chip suppliers.
Market analysts have noted that even small changes in AI chip supply chains could trigger large moves in stock prices, as the opportunities at stake reach tens of billions of dollars. For Nvidia, any sign of competitive pressure causes immediate volatility.
Market strategists said the developments highlight a critical moment in the evolving AI chip race. Many people expect AI computing costs to drop; This is a trend that could shake up purchasing decisions across industries. As computing becomes cheaper, adoption trend increases, giving companies more room to experiment with automation and productivity tools.
Analysts believe lower computing costs could provide strong economic benefits, especially for non-tech companies looking to integrate AI without a large upfront investment. This could help spread the impact of AI beyond Silicon Valley, potentially driving earnings growth across many industries.
But this change also increases uncertainty for established leaders. If more companies explore options beyond Nvidia, there could be a balance of power adjustment in the AI hardware landscape. This is especially important because Nvidia has been at the center of nearly every major AI deployment in the last two years.
Major indices still heading for a weak month
Despite the week’s partial recovery, the three major US indexes continue to endure a losing month. S&P 500 lost more than 1 percent in NovemberIt fell due to weakness in technology and rising concerns about valuations. Nasdaq fell over 3 percentThis reflects heavier pressure on high-growth stocks. Dow lost more than 1 percent Month to date.
Much of this year’s rally has been driven by a handful of mega-cap AI names. Their large impact means that even small declines in the group can drag the entire market. The question now is whether the AI sector will gain momentum heading into December or whether investors will turn defensive.
Investors are also evaluating whether the market will continue this rise. end of year rallyis often called santa claus rallyThis typically pushes stocks higher in late December. However, concerns about the extension of valuations in the artificial intelligence sector created hesitation.
Another factor is geopolitical uncertainty and slowing global demand; some investors believe this could limit gains in risky assets. While markets are still digesting this week’s tech headlines, the direction of the next big move remains unclear.
Despite the recent pullback, many analysts say long-term demand for AI infrastructure remains strong. The challenge for investors is to separate short-term volatility from long-term opportunities.
Fed rate cut expectations rise as officials change their stance
One of the key drivers of market sentiment this week has been the rapid shift in expectations. December Central Bank interest rate cut. Merchants now assign More than 80% chance with a quarter point discount 40% just a few days ago.
This sharp jump is due to more cautious comments from senior Fed officials. Leaders have signaled that cooling labor markets and slowing wage growth could justify a policy change. Many investors now view December as the most likely time for the Fed to start easing.
The sudden change in expectations has created a wave of optimism in some corners of the market, especially in interest-sensitive sectors such as housing and finance. Lower rates generally reduce borrowing costs and support business spending.
Still, not all investors are convinced. Some believe inflation remains too sticky for the Fed to act quickly. Others fear the outage could signal deeper economic weakness down the line. These conflicting interpretations have made rate speculation unusually volatile.
The Fed’s rate cut in December could help revive appetite for stocks and potentially support the market’s end-of-year rally. But for now, investors are riding with a mix of optimism, caution and fast-moving data.
