The news that Alibaba, China's largest e-commerce company, has created its own artificial intelligence (AI) chip has heightened concerns about a decline in Nvidia's exports to China, causing all three major stock indices on the New York Stock Exchange to drop.
As of 10:01 a.m. Eastern Time on the 29th, the Dow Jones Industrial Average was down 117.83 points (0.26%) at 45,519.07 on the New York Stock Exchange. The Standard & Poor's (S&P) 500 index fell 32.43 points (0.50%) to 6,469.43, and the Nasdaq Composite Index showed a decrease of 190.23 points (0.88%) to 21,514.93.
Alibaba is developing and testing next-generation AI-related chips in-house. While Alibaba's existing AI processors were manufactured by TSMC, it has now reached the stage of producing more advanced in-house chips.
In addition to Alibaba, other Chinese technology corporations are also working on developing products that could replace Nvidia's chips, causing investor sentiment in technology stocks to freeze. This is because as Chinese corporations increasingly rely on in-house chips, the performance outlook for American technology companies, including Nvidia, also darkens.
The stock prices of leading companies in the AI chip industry, Nvidia and Broadcom, fell by more than 3% during the trading day. The Philadelphia Semiconductor Index also approached a decline of 3% during trading. Among the 30 components of the index, all but three were in decline. TSMC, ASML, AMD, Arm, and Micron Technology experienced drops around 3%, while Lam Research decreased by 4.73%. Marvel Technology plunged 16%.
The Personal Consumption Expenditures (PCE) price index for July, released today, appears to have met expectations without significantly impacting the stock market. The U.S. Department of Commerce reported that the core PCE price index, excluding volatile food and energy prices, rose by 0.3% in July compared to the previous month. Compared to the same period last year, it increased by 2.9%. The overall PCE price index rose by 0.2% from the previous month and 2.6% from a year ago, all aligning with market expectations.
By sector, technology is down 1.52%. Consumer discretionary, industrials, communication services, and utilities are also in decline.