Chip stocks get hit as Nvidia tumbles; oil climbs

Even after giving a bullish forecast, Nvidia sank 5%, dragging down almost every company in a closely watched semiconductor gauge

• Nvidia shares fell 2.5% despite a strong earnings outlook
• S&P 500 edged lower as tech stocks lost momentum
• Oil prices dropped amid positive US-Iran nuclear talks

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A rout in chipmakers weighed on stocks as Nvidia Corp.’s results failed to inspire investors seeking reassurances about the artificial-intelligence outlook. Oil climbed as Iran said nuclear talks with the US were intense, spurring a flight to the perceived safety of bonds.

While 330 shares in the S&P 500 rose, the benchmark fell. The Nasdaq 100 lost 1.5%. Even after giving a bullish forecast, Nvidia sank 5%, dragging down almost every company in a closely watched semiconductor gauge. Salesforce Inc. gave a strong outlook for long-term sales and announced a large share buyback, helping assuage some fears about AI disruption of the software industry.

The mixed response from investors reflects lingering uncertainties about the outlook for the revolutionary technology. After soaring for much of the past few years, Nvidia shares have gone cold amid questions about massive AI spending. Meanwhile, traders have been fleeing sectors seen as potentially under threat from AI disruption.

The reason why investors didn’t launch into a frenzy after seeing revenue, net income, and guidance come in way better than expected is that Nvidia rarely misses on those metrics, according to Hardika Singh at Fundstrat Global Advisors.

“But where it did miss was easing investors’ concerns about its narrowing moat in the evolving world of compute and explaining its gameplan for how it’ll fare in a world of AI disruption that could upend all kinds of businesses from cybersecurity to food delivery to banks,” she said.

HSBC Holdings Plc strategists halved their US equity overweight, rotating into emerging markets and Europe amid strong economic momentum. The team led by Max Kettner remains firmly risk on, citing an increase in key cyclical indicators, such as spending and manufacturing, in the last two months.

On the economic front, US jobless claims rose by less than expected last week, indicating that layoffs remain relatively low.

The S&P 500 lost 0.8%. The yield on 10-year Treasuries fell three basis points to 4.03%. The dollar wavered. Oil topped $66.