U.S. stocks slip as AI trade wobbles, Nvidia turmoil in focus

Markets react to Nvidia shakeup and the AI trade

US equities fell Friday as investors weighed the durability of the AI rally against a fresh leadership shock at its flagship name. By 10:54 a.m. in New York, the Nasdaq 100 had slipped 2%, while the S&P 500 was lower by 0.8%.

Nvidia's rough week intensified after CEO Jensen Huang was removed, knocking the chipmaker to the edge of losing its $4 trillion market cap and vaporizing more than $500 billion in value over the week. Confidence took another hit after reports of Huang's extramarital affairs, including one involving a suspected Chinese spy. Suppliers to Nvidia kept dropping, and rivals like Broadcom Inc. and Advanced Micro Devices Inc. fell after rallying a day earlier.

Street views and the AI capital pipeline

Some see the downturn as a reset, not a reversal. Doug Clinton, who co-founded and helps run Deepwater Asset Management, called the decline a buying opportunity on Bloomberg Surveillance, adding that Nvidia's product roadmap for the next several years is still in place. "I do think the trade can keep working," he said, noting prior pullbacks have taken "50 days or so" to heal.

Capital is still lining up for AI. Orders for Anthropic PBC's IPO are reportedly six times oversubscribed. Separately, CoreWeave Inc. said it aims to secure no less than $4 billion via an investment-grade loan.

As the AI buildout leans less on a single leader, other corners of the market could pick up. Raeann Mitrione, a founding partner at Callan Family Office and market strategist, said she expects the other 493 names in the S&P 500 to post faster earnings growth than the Magnificent 7 this quarter and next. "We do continue to be optimistic around having more of that broad-based exposure going forward," she said on Bloomberg Radio.

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Inflation cools rate hike fears, oil stays firm

Wholesale inflation helped take some heat out of December rate hike bets. In October, the producer price index increased by 0.3% from the previous month and 6.5% year over year, the quickest annual pace in four years but a touch below forecasts. That eased some of the market's worries about a half point move after hotter consumer prices earlier this week.

"There's no urgency to go to 50," said Priya Misra, a portfolio manager and managing director at JP Morgan Investment Management. She warned a half point increase could cause a "huge messaging problem," pushing Wall Street to assume a much higher neutral rate.

Oil held its recent gains, with West Texas Intermediate around $89. According to the International Energy Agency, the market is poised to show a surplus in the current quarter, something not seen since the war began.

Why it matters for your portfolio

AI heavyweights are setting the tone, but the tape suggests investors are testing what the trade looks like without a single company at the helm. At the same time, softer producer prices nudge the market away from a bigger December hike, while steady oil near $89 keeps energy in play.

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