Nvidia CEO: $1.3T chip selloff a buying opportunity

U.S. semiconductor stocks began recovering on Monday after a one-day selloff on Friday that erased about $1.3 trillion in market value from the sector.

The drop followed weaker-than-expected guidance from Broadcom and a stronger U.S. jobs report, which together raised concerns that the Federal Reserve could keep interest rates elevated. The Nasdaq fell 4.2% on Friday. The Philadelphia Semiconductor Index plunged about 10%, its largest single-day decline since March 2020.

By Monday premarket trading, Nasdaq futures were up more than 1.5% and several major chipmakers were trading higher. Micron Technology, which tumbled roughly 14% on Friday, traded up about 8% in premarket trading. Nvidia climbed nearly 3% and Advanced Micro Devices gained about 4%.

Speaking in Seoul, Nvidia founder Jensen Huang described the selloff as an opportunity to buy into longer-term demand for artificial intelligence hardware. He said, “We’re at the beginning of it, and whatever happened to the stock market, you should be very happy because now you can buy at a discount.”

Market strategists said the underlying case for AI-related spending remains a factor supporting the sector. Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote that recent volatility had not changed the broader investment case for technology and that corporate fundamentals continued to support spending on AI infrastructure and applications.

Some analysts pointed to historical patterns as context for the recent swings. Chris Beauchamp, chief market analyst at IG.com, noted research showing the S&P 500 rose more than 19% in the two months after its late-March lows and that, on past occasions, the index was higher in the months that followed. He also warned that 2018 provided a counterexample, when continued rate hikes coincided with a later market downturn.

Traders and portfolio managers said the episode highlighted sensitivity in high-growth shares to monetary policy expectations and company guidance. They advised careful position sizing rather than assuming a single day of volatility marked a lasting change in demand for chips and related hardware.

The selloff and the partial rebound illustrate the link between macroeconomic data, central bank policy expectations and valuations in the semiconductor sector, which has seen strong demand for AI chips and related equipment this year.