‘Great earthquake’ came in the chip market: Rs 124 lakh crore from the stock market, big tech companies lost their sweat!

On Friday, there was a huge fall in the shares of chip manufacturing companies traded in the US and their market value decreased by about $ 1.3 trillion i.e. Rs 124 lakh crore. Big companies in the AI ​​sector like Nvidia, Micron Technology and Advanced Micro Devices suffered huge losses. The biggest reason for this was the impact of Broadcom’s weak report at the beginning of this week on Wall Street. The PHLX chip index fell 10.3%, the biggest one-day decline since March 2020, when the coronavirus pandemic hit global markets.

Why did the decline occur?

Friday’s selloff compounded Thursday’s losses after Broadcom’s quarterly report showed demand for its custom AI chip business was lower than expected. PHLX suffered a total loss of 12 percent in two sessions, which shows that investors are becoming increasingly concerned about expensive and fast-growing tech stocks. All this is happening when Elon Musk is preparing to launch a big IPO for SpaceX next week at a high valuation of $1.75 trillion. The chip index reached a record high on Wednesday and despite Friday’s loss, it is up 73 percent since the beginning of the year.

Which big companies suffered losses?

Shares of Nvidia, the world’s most valuable chip maker, fell by nearly 6 percent, reducing its market capitalization by more than $300 billion. Shares of Micron Technology fell 13 percent, causing a loss of approximately $150 billion in its market value. Recently, shares of Marvell Technology, which was a favorite of investors, fell by 17 percent, while AMD suffered a loss of about 11 percent. Dennis Dick, Proprietary Trader of Triple D Trading, said that there were many people here who were buying the dip without thinking. He was making profit by buying shares at a fall without thinking, but today that trend ended.

Tension of increasing interest rates

Concerns about higher interest rates after better-than-expected jobs data also spooked investors across the US stock market, with the S&P 500 falling 2.6 per cent. Shares of Broadcom, one of the biggest gainers in the AI ​​race, fell 7.9 per cent, taking it to a loss of nearly 20 per cent in two days. Ohsung Kwon, Chief Equity Strategist of Wells Fargo, said that there was too much buying in the semiconductor sector. That is why we are seeing selling. I don’t think this is the end of the (semiconductor) bull market.