Please ensure Javascript is enabled for purposes of website accessibility

Why Nvidia and AMD Stocks Plunged Today

By Joe Tenebruso – Sep 3, 2020 at 6:19PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These chipmakers surrendered a chunk of their recent gains during Thursday's stock market crash.

What happened 

Shares of Nvidia (NVDA 3.66%) and Advanced Micro Devices (AMD 4.34%) fell 9.3% and 8.5%, respectively, amid a brutal sell-off in technology stocks on Thursday.

So what

The Nasdaq Composite dove 5%, as previously high-flying large-cap tech stocks like Apple and Microsoft fell sharply. Nvidia's and AMD's losses also contributed to the decline.

A person is holding a tablet displaying a downwardly sloping digital chart.

Shares of Nvidia and Advanced Micro Devices sank on Thursday. Image source: Getty Images.

There wasn't much in the way of major news that sparked the sell-off. Yet the valuations of many tech stocks have become stretched in recent weeks as the stock market rallied sharply off its March lows. It appears many traders and investors decided today was the day to begin taking some profits off the table. 

Now what

Despite today's losses, Nvidia and AMD are still up 208% and 162%, respectively, in 2020. The two leading chipmakers are benefiting from the rising demand for chips in the gaming and cloud computing markets, as well as in a host of other industries.

These growth trends are likely to persist even if the stock market continues to fall in the days and weeks ahead. If you've had Nvidia or AMD on your watch list, further market declines could give you the chance to pick up some shares at a sizable discount to the prices at which they've recently traded.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple, Microsoft, and NVIDIA and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.