The Philadelphia Semiconductor Index fell more than 2% after Microsoft announced plans to scale back its data center expansion, sending semiconductor stocks tumbling worldwide.
On Monday, the index dropped 2.59% to close at 5,003.54 points, narrowly holding above the 5,000 mark.
Nvidia’s stock fell 3.09% to $130.28, cutting the company’s market value to $319.1 billion.
The market turbulence followed Microsoft’s decision to cancel some planned data center projects. Earlier this year, the company had committed $80 billion to artificial intelligence (AI) and data center construction.
The scaled-back plans are particularly significant since these data centers were expected to house large quantities of AI-specific chips.
Nvidia dropped more than 3%, while Microsoft fell 1.03%. Nvidia’s decline also weighed on its competitor AMD, which slipped 2.46%.
Meanwhile, Intel lost 2.41%, Broadcom fell 4.91%, and Taiwan’s TSMC slid 3.32%. As a result, the semiconductor index closed down more than 2%.