Nvidia craters 9.3% as AI chip stocks get smoked in broad selloff

Nvidia's AI-chip crown took a beating on Nov. 5. The stock closed at $181.60 after sliding 9.26%, as investors stampeded out of semiconductors and anything tied to the AI trade. Volume told the story: 300.4 million shares changed hands, roughly 157% above the three-month average of 116.7 million. Nvidia now sits at its lowest level since April and is down 2.5% year to date.

The pain wasn't Nvidia's alone. Advanced Micro Devices closed at $404.40, down 17.26%, and Broadcom finished at $291.53, off 10.43%. The S&P 500 fell by 4.36%, now at 7,354, while the Nasdaq Composite dropped by 5.52%, now at 24,315. Broadly, it was a rout across chip and compute names.

What lit the fuse? Election-related uncertainty and fresh doubts about AI demand, not anything specific to Nvidia's business. The rotation away from the group reflected skepticism about where demand goes next, and the midterm results have market watchers asking whether the data center spending boom could shift. AMD and peers keep insisting data center demand remains strong.

Next up: Nvidia's quarterly update on Nov. 17, which now carries extra weight. The company has said it expects sales to climb another 70% in the next fiscal year, and that the number would be higher if not for supply constraints. Its buyers, meanwhile, are spread across the country and around the globe.

Zoom out and the long arc is staggering. Nvidia went public in 1999 and has climbed 442,644% since. In disclosures, The Motley Fool's Howard Smith lists positions in Broadcom and Nvidia, and the Fool recommends AMD, Broadcom and Nvidia — with its writeup framing the pullback as a potentially compelling entry point.