STORY: A selloff in AI-related stocks Friday weighed on the market, with the Dow closing down two-tenths of a percent, the S&P 500 shedding more than six-tenths of a percent and the tech-heavy Nasdaq tumbling more than one percent.
Dell was among the deepest decliners in the S&P 500, falling almost 9%.
High manufacturing costs for AI-optimized servers and intensifying competition overshadowed the company's bullish demand forecast for AI infrastructure.
Nvidia dipped for a third straight day, losing almost three-and-a-half percent.
The AI heavyweight's quarterly report on Wednesday fell short of investors' high expectations, something that's starting to become a bit routine by now explains Eric Diton, president and managing director of The Wealth Alliance.
“They're (Nvidia) firing on all cylinders. They're probably going to beat, and stocks are probably going to go down because the expectations that are built into this company are just enormous. When you're over a $4 trillion company, how fast can you keep growing? They grew at 56%, and the markets were, ‘Wow, that's the slowest we've seen in a while.' Yeah, the law of big numbers says you can't… If you keep growing at 50%, you will become the world at some point. So, it is going to have to slow.”
Other stock moves included U.S. shares of Alibaba, which soared 13% after the Chinese company reported stronger-than-expected quarterly growth in its cloud computing business, driven by AI-related demand.
The Wall Street Journal also reported that Alibaba has developed a new AI chip.
On the flip side, chipmaker Marvell slumped almost 19% after forecasting quarterly revenue below expectations.
The stock market will be closed on Monday for the Labor Day holiday.
