Why Nvidia Stock Is Falling Today

Nvidia (NASDAQ: NVDA) shares are being hit hard in Tuesday’s trading. The semiconductor company’s share price was down 8.7% as of 2:15 p.m. ET, according to data from S&P Global Market Intelligence.

The artificial intelligence (AI) leader’s share price is falling in response to growing concerns about the health of the US economy. China news and other geopolitical dynamics are also driving a selloff for Nvidia and other chip stocks today.

Investors are feeling nervous ahead of this week’s jobs report

The U.S. Labor Department is expected to release its latest employment data on Friday, and Wall Street is seeing an increase in bearish sentiment ahead of the report. Investors have been eagerly awaiting interest rate cuts expected by the Federal Reserve this month, and the rate cut could be larger than many analysts initially expected. But there is a catch.

Some analysts now expect the Fed to cut interest rates by a full point this year. If so, this could be a sign that the central banking authority believes the economy is headed for a recession. Investors are bracing for a worrisome jobs report later this week, and Nvidia and other high-profile growth stocks are seeing big valuation downgrades.

Concerns that China will invade Taiwan have hit chip stocks again

In an interview on Sunday, Taiwanese President Lai Ching-te said that China would also have to take over land from Russia if it wanted to officially make Taiwan its territory. Rather than suggesting that China should reclaim Russian land within its own borders, Lai was making a statement about whether the Chinese government was being logically consistent in some of its stated reasons for plans to exercise more control sea ​​over Taiwan. However, it appears that Taiwan’s president’s comments highlight the risk of China invading Taiwan at some point in the not-too-distant future.

While the Chinese government has long claimed that Taiwan is already part of its territory, the claim has taken on added significance in light of Taiwan’s crucial role in semiconductor manufacturing and artificial intelligence trends. The island nation hosts Taiwan Semiconductor Manufacturing — the leading contract semiconductor manufacturer responsible for manufacturing advanced chips for AI applications. Nvidia relies on TSMC to manufacture its chips, and any disruption to the fabled leader’s production could have major implications for the company’s performance.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Why Nvidia Stock Is Falling Today was originally published by The Motley Fool