Nvidia Earnings Trigger AI Stock Selloff; Nasdaq Falls 1.2%

Wall Street dumped artificial intelligence-related stocks following record earnings from Nvidia, the world's largest company by market capitalization. Analysts attributed the selloff to expectations already priced into shares and results that failed to dispel concerns over excessive AI investment.

On Feb. 26, the Dow Jones Industrial Average edged up 17.05 points, or 0.03%, to close at 49,499.20 on the New York Stock Exchange. The S&P 500 fell 37.27 points, or 0.54%, to 6,908.86, while the Nasdaq Composite dropped 273.69 points, or 1.18%, to 22,878.38.

Among major technology stocks, Nvidia tumbled 5.46%. Apple fell 0.47%, Amazon declined 1.29%, Alphabet dropped 1.76%, Broadcom slid 3.19%, Tesla lost 2.11%, and Walmart shed 1.06%. Micron fell 3.13%, and the Philadelphia Semiconductor Index declined 3.19%. Microsoft rose 0.28% and Meta gained 0.51%, bucking the broader decline.

The selloff began at the open following Nvidia's fiscal fourth-quarter results released after the previous session's close. Nvidia reported revenue of $68.13 billion for the quarter ended January, up 73% year-over-year and exceeding LSEG's forecast of $66.2 billion. The figure marked the company's highest quarterly revenue on record. Data center sales accounted for $62.3 billion of the total.

Adjusted earnings per share came in at $1.62, beating Wall Street's estimate of $1.53. Annual revenue rose 65% to a record $215.9 billion.

Nvidia projected first-quarter revenue of $78 billion, surpassing analysts' expectations of $72.6 billion. The guidance excluded China, where export restrictions create ongoing uncertainty.

Investors remained concerned that the results failed to fully address worries about hyperscalers' excessive capital spending. Questions persist about whether Nvidia's revenue model, which depends heavily on orders from debt-financed cloud giants, is sustainable.

Uncertainty surrounding U.S.-Iran nuclear talks also weighed on sentiment. The two nations resumed negotiations at the Omani ambassador's residence at the United Nations in Geneva but failed to reach agreement on key issues including permanent uranium enrichment suspension. Talks will continue next week in Vienna. Iranian Foreign Minister Abbas Araghchi called the discussions "one of our most serious talks" and said good progress was made.

Oil prices edged lower on signs of progress in nuclear negotiations. West Texas Intermediate crude for April delivery fell $0.21, or 0.32%, to $65.21 per barrel on the New York Mercantile Exchange.